Empty homes encircled by chain-link fences and clad in decaying siding are a common sight in Berkeley’s neighborhoods — scattered in between multi-million-dollar homes and rent-controlled dwellings, alike. But those uninhabited plots are more than an eyesore.
In a city plagued by an affordable housing shortage, every vacant home is a lost opportunity. Now, following the lead of Oakland and possibly San Francisco, Berkeley is considering a way to change that: tax every vacant property between $3,000 and $6,000 annually until the landlord rents, renovates or sells.
Paola Laverde, a Rent Board commissioner and chair of the Berkeley Tenants Union, “full throatily” supports the idea. She bristles every time she is reminded of a 10-unit apartment building on Delaware Street in North Berkeley that has remained dark for 16 years.
“It’s a sin that these 10 units are empty, and this is just one rent-controlled building that has been pulled off the market,” Laverde said.
Berkeley will spend the next few weeks studying how an “empty homes” tax may bolster the city’s housing supply, as an unaffordable market and risk of displacement continue to burden residents.
But a divided Berkeley City Council cannot agree whether the approach would have a widespread impact, especially as voters will also be deciding on several other tax measures during the Nov. 8 election.
City Councilmember Kate Harrison proposed the tax to spur property owners to take action. According to a staff report, the tax is projected to open upwards of 1,000 units within two years and generate between $2.7 and $5.4 million annually — funds that would be distributed to affordable housing projects, support services and property acquisitions by the city.
If ultimately approved as-written, the ballot measure would add a chapter to the city’s municipal code that would tax empty condos, duplexes, townhomes and single family homes $3,000 annually, while all other, larger units would pay $6,000 each year.
Housing units are eligible to be taxed if they sit vacant for more than six months, are not undergoing permitted renovations and are owned by corporations or LLCs, not families.
According to 2020 Census data, 4,725 units — making up 9% of Berkeley’s housing stock — were vacant. The city’s staff reported that 2022 data from the Berkeley Rent Stabilization Board showed owners of 1,128 of those homes indicated they weren’t available to rent.
Harrison said this tax would be one more drop in the bucket of Berkeley’s efforts to alleviate its housing crisis, including the city’s approval of Measure O’s $135 million affordable housing bond, increased permitting for accessory dwelling units outside fire zones, rezoning near BART stations and the complete elimination of single-family zoning.
“There’s an unforgivable number of units that lie vacant, many of them empty for years,” Harrison said. “Building housing takes time. Here, we can bring these units back online in a more rapid fashion than that.”
Harrison’s proposal carves out several exemptions, including small property owners, owner-occupied duplexes that have removed single units from the market for their own use and accessory dwelling units.
Properties that are undergoing active reconstruction due to disasters or are owned by elderly residents undergoing care outside of their homes will be granted time extensions.
While the tax was ultimately approved in a 6-3 vote late Tuesday night, the Berkeley City Council was divided on whether it would make any substantive impact on housing or hurt small “mom-and-pop” landlords. Councilmembers Rashi Kesarwani, Susan Wengraf and Lori Droste opposed the proposal.
Wengraf said she was concerned that voters already stressed by inflation and high gas prices may be less willing to support significant tax increases, and encouraged the city to look into a smaller parcel tax in order “to be sensitive to the economic conditions that we’re dealing with right now.”
Kesarwani said the proposal was a worthy idea worth exploring and expanding, but she was concerned it would jeopardize voter support for a $28 million parcel tax for repaving and redesigning streets, and a $300 million bond partially dedicated for affordable housing.
Mayor Jesse Arreguín, who tuned in from Washington, D.C., where he was lobbying for federal infrastructure and housing funding, clarified that he “respectfully” doesn’t believe that the proposal is ready but wanted to keep the discussion on the table.
The council will have to make a final decision in July before its summer recess in order to put the vacancy tax on the November ballot, where it would need to earn support from two-thirds of voters. Implementation would not occur until January 2024.
Harrison said neighboring Oakland reaped more than $7 million in revenue the first year it collected a similar vacancy tax, after it passed by 70% in 2018. Berkeley’s proposal is based on the “empty home” tax that San Francisco city officials will present to residents in the November election.
By the end of Tuesday’s discussion, Harrison was frustrated her colleagues would rather delay asking voters for approval instead of focus on exclusions to make everyone happy.
“What’s clear is happening here is an attempt to kill this,” Harrison said, “because we do not ever want to have the big people pay.”