Landlord group sues Berkeley over rental tax initiative

The owners of this rent-controlled apartment complex at 3100 College Ave. are renting out three of its apartments on Airbnb. Berkeley law does not allow rentals shorter than 14 days. Photo: Melati Citrawireja
The city is being sued over the ballot language of a measure relating to landlords’ business license tax. Photo: Melati Citrawireja

The Berkeley Rental Housing Coalition political action committee has filed a lawsuit and demanded that the city of Berkeley correct the official ballot language of a measure set to appear in the November election.

After officials canceled the special City Council meeting set for Aug. 11 due to lack of a quorum, the coalition filed suit Wednesday in Alameda County Superior Court. Correcting the language for Measure U1, the business license tax, was one of two agenda items scheduled for deliberation that evening.

Backed by the Berkeley Property Owners Association, the litigation comes as the property owners’ group is pushing for its own competing tax initiative, Measure DD.

Unanimously adopted by the Berkeley City Council, Measure U1 would boost the city rental tax on revenue for landlords with more than five units to 2.88% from 1.081%. But U1 contained exemptions, such as for units with fresh occupancy certificates for 12 years, and affordable housing units run by non-profits.


The current ballot language says the city estimates the new law would raise about $3.9 million in new tax revenue, which would rise as rents increase.

The crux of the issue for the coalition is the official wording of Measure U1 — that it overstates projected new tax revenue by more than 40%, or $1.6 million, according to a written statement.

City Manager Dee Williams-Ridley acknowledged in an Aug. 11 memo to council that the language should be corrected to $2.3 million to reflect actual projected revenue.

Coalition executive director Krista Gulbransen told Berkeleyside in a phone interview, “We’re feeling positive about how the city is responding to our issue.” She added that there will be a hearing early next week, and the attorneys are working with the city lawyers to forge a potential agreement which could be presented to the court.

The coalition claims the text “hides exemptions for politically influential real estate developers and owners of new luxury apartment buildings.”


The coalition’s Measure DD would raise the rental unit revenue tax to 1.5%. Its measure would establish a citizen advisory committee that would make non-binding recommendations to council on affordable housing and homelessness prevention, among other things. It does not include the 12-year exemption for newly inhabited units, and would generate an estimated $1.4 million a year to begin with.

The city currently taxes landlord revenue coming from three or more units at a rate of 1.081%.

City spokesman Matthai Chakko declined to comment.

Stay tuned to Berkeleyside for more 2016 election coverage.

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