Basing parcel taxes on inaccurate data is allegedly losing the city of Berkeley millions of dollars each year. This could remain the case either until voters amend the calculation process through a special election or until the city takes unprecedented action.
A “unique methodology”: The history of parcel tax in Berkeley
In 1978, California voters passed Proposition 13, a controversial initiative restricting annual property tax increases to 2% or less per year. Since then, city parcel taxes became a popular way to circumvent the proposition.
Berkeley introduced its first parcel tax — a tax on characteristics of a parcel of land, rather than property value — to fund Berkeley Public Library when voters passed the Library Relief Act of 1980. The act set progressive parcel taxes, meaning those with larger properties would pay more in parcel taxes than those with smaller homes.
The Library Relief Act also defined “square footage” as the “total gross horizontal areas of all floors,” which six other voter-approved measures have since affirmed. It specifically excludes pools and patios.
Berkeley’s square footage definition is different from that of Alameda County. Alameda County defines gross square footage as “all of the floor area confined by the outside surface of the exterior walls of a building.” This difference is the reason Berkeley cannot base its parcel tax calculations off of county data, according to a 2020 letter to Berkeley City Council by Berkeley’s director of finance Henry Oyekanmi.
“The ‘City of Berkeley uses its own unique methodology’ for these taxes, because that is what the voters approved and therefore what is required,” Oyekanmi said in the letter, quoting correspondence from the Berkeley Neighborhoods Council.
“Haphazard taxation”: Challenges with current parcel taxes
Currently, Berkeley property owners pay voter-approved parcel taxes to specifically fund street lighting, parks, landscaping, fire preparedness and emergency medical services. All of these taxes are calculated using the city’s square footage data. Based on data from the city of Berkeley website, in total, parcel taxes will cost taxpayers about 71 cents per square foot in the 2021-22 tax cycle, meaning a resident who owns a 1,000 square foot home should pay about $710 in parcel taxes next spring.
The problem with this system is that Berkeley’s square footage data is often not reflective of current realities.
For example, the property at 2413 Browning St. is 720 square feet in city data. In reality, however, it is likely closer to 3,367 square feet, which is the statistic recorded in the Multiple Listing Service, or MLS, frequently used by realtors in the state.
MLS data is based on a square footage definition that differs from that of the city in minor ways, which likely couldn’t account for this 2,647 square feet difference. As a result, in 2022, Berkeley would be losing about $1,900 in parcel tax revenue on this property alone.
According to Berkeley homeowner, teacher and tax equity advocate Lilana Spindler, this is not an isolated case.
Over the course of a year, she identified 900 undercharged properties in Berkeley, amounting to an estimated 700,000 square feet not reflected in current city data. This estimate is not comprehensive, she added, and there are likely many more properties with untallied square footage.
“They are losing out on millions of dollars through this haphazard taxation,” Spindler said.
At the same time, inaccurate city square footage data also means some properties are currently overassessed. Berkeley property owners whose homes are recorded as having more livable space than they actually do are paying more in parcel taxes each year than they should.
Berkeley resident and former contractor Chris Catlett lives in a home on Parker Street. According to the city, his property is 2,247 square feet, but county public record has it at 1,128. Catlett said he is unfairly being charged for unlivable space in his unfinished basement. Next year, he will pay about $800 extra in parcel taxes because of it.
However, Catlett is doing what he can to prevent that from happening. Retired and living on a fixed income, Catlett said he first asked Oyekanmi for a reassessment.
“All you have to do is walk in my basement, and you’ll see none of it’s livable space, but he refused to do that,” Calett alleged. “He said, ‘I’ll look into it’ and never did.”
“Our commitment”: Calls for reform
Calls for a review of the way Berkeley calculates its parcel taxes are not new. In 1994, a Landscape Parks Review found city procedures “do not capture all changes in assessable square footage,” and that the city’s method often doesn’t account for additions and renovations.
The 2005 Berkeley city audit found square footage for parcels “might have been understated or overstated, resulting in improper assessments.” The audit also states “there is no systematic plan in place to capture such parcels,” causing the city to miss out on revenue from under-assessed parcels.
The city’s 2012 information calendar also included a recommendation to the city manager to “consider whether increased accuracy and efficiency of special tax calculations is worth the cost of a special election” to simplify the definition of square footage, likely so Berkeley could begin calculating its parcel taxes off of county data.
Alameda County Assessor Phong La said his office’s square footage data is based on several factors, including information drawn from permits, construction blueprints and on-site visits conducted by the county assessor office’s staff.
Berkeley’s square footage data also draws from approved permits but is largely updated on a case-by-case basis. For the most part, it is on individual homeowners to notify the city of additions or increases to their property’s square footage, according to city homeowners.
But there are several incentives for Berkeley property owners to not notify the city of these changes. For one, notifying the city of an increase in your property’s square footage will mean an increase in annual tax bills. In addition, those who do attempt to notify the city in good faith are often met with bureaucratic hurdles.
For example, in most of Berkeley, increasing the number of bedrooms on a property to five or more requires a use permit. Before the city can grant these, homeowners must prove consideration of special site conditions around their property, such as landmarks, creeks and seismic hazards. Additionally, the city requires homeowners to review development standards to determine allowable height, setbacks and other requirements for their additions.
In 2020, a group of Berkeley residents laid out 11 examples of parcel tax inequity in a letter sent to the Berkeley Finance Department. Colleen Miller, who lives on the 2100 block of Essex Street, was one of those residents. She said in the letter that she pays extra for a 1,024 square-foot unfinished basement, while a nearby duplex doesn’t pay parcel taxes on a 1,485 square-foot rentable dwelling space.
“Yes, it’s financial, but it’s the injustice that scoots us along in our commitment,” Catlett said.
“To the voters”: Possible paths to reform
In February, City Councilmember Ben Bartlett attempted to amend the parcel tax calculation process to address issues with height requirements and prevent properties from being over-assessed.
The City Council pulled the proposal from the meeting’s agenda and never revisited it. Bartlett’s Chief of Staff James Chang said the proposal was dropped because it was not in the council’s authority to amend the calculation process.
“We do take these cases seriously and we do care but this is a city staff issue,” Chang said. “And anything done with assessing property will have to go to the voters.”
La confirmed that Berkeley’s parcel tax calculations fall under the finance department’s authority and that any potential changes are “100% the agency’s decision.”
According to La, the finance department is responsible for giving the Auditor-Controller Agency square footage numbers to use when creating homeowners’ tax bills each year.
“Unfortunately, it’s not enough for people,” La said. “They still insist that we should do something when we have no authority.”
Despite multiple attempts by The Daily Californian to contact Oyekanmi, he could not be reached for comment. However, in his letter to the council, Oyekanmi said “there is nothing improper” about the differences between city and county data because Berkeley voters approved a unique square footage definition 41 years ago with the Library Relief Act.
However, a section in the same act provides the city’s finance director with the ability to “prescribe, adopt and enforce rules and regulations relating to the administration and enforcement” of the parcel tax the legislation imposed, including provisions for the reexamination and correction of inaccurate square footage data.
Spindler believes the finance department has more authority to address current inaccuracies than it lets on.
“Really trying to tackle it might just show their ineptitude,” Spindler alleged. “I think that’s why they are choosing to ignore it.”
Obstacles to correction
La also said it would be a massive undertaking and financially costly for Berkeley to remeasure all 28,685 parcels in the city.
Catlett is doubtful the city will amend the parcel tax calculation process or update square footage data and is now in the process of filing a formal appeal to the city’s finance department.
In order to qualify for a reimbursement, the space in question must not align with the city’s taxability requirements, which are still based on the city’s square footage definition spelled out in the Library Relief Act of 1980.
Catlett said he believes the definition is unfair and doubts the department will honor his request for reassessment.
Spindler also filed a formal assessment correction request for her property at 2215 Stuart St. and ended up in court over it. She said although the property is only 3,200 square feet, she was being taxed as if it was more than 5,000 because city data accounts for unlivable space in her unfinished basement.
In small claims court, Spindler argued because Berkeley zoning code defines usable space as that with a ceiling “taller than six feet” — which her basement is not — she was entitled to a reassessment. She won the case, but the city appealed arguing that Berkeley’s tax code does not have to follow its zoning code. In September 2019, the court ruled in favor of the city.
Multiple departments in Berkeley are working to publicly provide taxable square footage data on the city’s parcel conditions website and implement “operational changes” to improve square footage assessments, according to Oyekanmi’s letter.
However, Catlett said he and Spindler will not be content until city data reflects current square footage realities in Berkeley.