Berkeley mayor makes case for tax measures O and P, hits resistance

Mayor Jesse Arreguín (left) fields questions from community members after Thursday’s event. Photo: Emilie Raguso

Berkeley Mayor Jesse Arreguín hit the campaign trail last week to urge voters to support tax measures O and P to raise money for affordable housing and homeless services in the city.

The event was part of a series organized by the local League of Women Voters (of Berkeley, Albany and Emeryville). League president Adena Ishii interviewed the mayor at Bay Area Children’s Theatre’s Osher Studio in downtown Berkeley’s Arts Passageway. A sparse crowd of a few dozen people watched. Some shouted out in frustration at times at what they saw as evasive answers from the mayor as the evening wore on.

The mayor said Measure O will help the city fight displacement and preserve diversity by creating more affordable housing, while Measure P will bring more money into the city’s general fund to pay for services to help those who are homeless. Programs like the new Pathways navigation center may not be able to continue without Measure P, he added: “We cannot continue to fund that without affecting our ability to fund necessary city services.”

Critics in the room said the numbers presented to voters in the ballot language were misleading, and wanted to know why only nonprofits would be eligible for affordable housing money. Some of those nonprofits have contributed large sums to support the Measure O campaign, they added, and said it looked to them like a conflict of interest. Attendees wanted to know about accountability measures, and how the city would decide which projects would be eligible for city support.


Measure O would fund $135 million in general obligation bonds “to create and preserve affordable housing for low-income households, working families, and individuals including teachers, seniors, veterans, the homeless, and persons with disabilities.” The city promises citizen oversight and independent audits. The ballot language spells out the details, and the mayor read from the language at length during Thursday’s forum. A two-thirds majority vote is needed for it to pass.

The city estimates it will cost property owners $23 for every $100,000 of assessed value after the bonds are issued. In 2025, that is projected to jump to about $33 per $100,000. Measure O is estimated to cost about $7.5 million a year, including debt payment.

Measure P would increase the property transfer tax from 1.5% to 2.5% for the top third of residential and commercial property sales annually. The tax initially would apply to sales of $1.5 million or more, but this would be adjusted annually to apply only to the top third of sales. The city estimates this will raise $6 million to $8 million each year for the general fund to pay for “navigation centers, mental health support, rehousing and other services for the homeless, including homeless seniors and youth,” and other related endeavors.

A panel of experts, similar to the one the city created when voters approved the soda tax in 2014, would recommend which services should be funded. Measure P requires a simple majority for approval.

The Housing Trust Fund, where the city pools money to help pay for affordable housing, needs to be replenished, the mayor said Thursday. Last year, the Berkeley City Council voted to set aside the bulk of that fund to help pay for the ambitious $110 million Berkeley Way complex. The development is set to house veterans and unsheltered individuals, and provide shelter beds and robust services too. The city says more services and housing are needed, however, and that measures O and P will play a critical role in addressing the demand in Berkeley.

The city spends about $17 million each year on services and programs related to homelessness.

Berkeley voters said earlier this year that affordable housing is a top priority for them, and Measure O has garnered widespread support from both sitting officials and a long list of Berkeley candidates.


“We’re facing a crisis of availability. We’re facing a crisis of displacement,” the mayor told attendees at the League forum last week. “We all know we’re in a housing crisis. We need to act now and this is one step the city of Berkeley can take.”

In particular, he said, local money like this is important because it can be leveraged 4-to-1 to seek outside funding to bring affordable housing projects to fruition. He said projects like Berkeley Way, and a plan to build affordable units at Cedar and Oxford streets, “cannot move forward if Measure O does not pass.”

The mayor said there’s been a 15% increase since 2015 in the size of the city’s homeless population. Shelter beds are full, and there isn’t enough housing for everyone: “We have to do something bold. We have to have the resources to also match the scale of our homeless crisis and invest in best practices we know will actually help solve the problem.”

Council members have said previously that Measure O will help Berkeley get its housing stock to “10% affordable” by 2030.

By the numbers

Berkeleyans have a history of giving generously when the city puts out the call. In recent years, the city reported in February, voters have “approved a $30 million infrastructure bond in 2012 (Measure M), an increase in the Parks Tax in 2014 (Measure F), and, in 2016, the passage of a $100 million infrastructure bond (Measure T1).” Combined current annual taxes for what the city calls “the average Berkeley homeowner” amounted to $7,397 as of June 2018. Berkeley’s tax rate of 1.74% is a bit less than Albany’s and a bit more than Oakland’s, according to the most recent comparison available.

It bears taking a moment to look at how the average homeowner is defined. The estimate the city used this year for the value of an “average” 1,900-square-foot single-family home is $425,000. According to 2018-19 Alameda County Assessor’s Office data for Berkeley, the average value may be a fair bit higher, depending on how you crunch the numbers. The city itself estimates that the average value will be $464,581 (after the homeowner’s exemption) at the likely time of bond issuance next year, should it pass.


The “average” assessed value of $425,000 may be familiar to voters who saw it in the ballot materials for the T1 infrastructure bond in 2016. At the time, in November 2016, it was presented as the estimate for what the average assessed home value would be if T1 bonds were issued in 2017. It was a projected figure based on the city’s calculations.

Some community members have asked why the city did not use a projected value in the topline language for Measure O this year. Why did the city use an old number it knew to be outdated, they have wondered at community events, in the comments on Berkeleyside and in opinion pieces too. Why wasn’t this figure updated so the average cost would be more accurately presented?

“Maybe we should have,” said Matthai Chakko, city spokesman, adding, of the $425,000 number: “It’s a figure that we’ve used.”

He said he couldn’t explain why the city didn’t follow the 2016 methodology of calculating the average based on a projection.

If the city had followed the 2016 methodology, the ballot language would have read that the annual cost would begin at $107 for the average assessed home value of $465,000. Whether that would have made a difference to voters is unknown, but there’s no question that council members have repeatedly stressed in recent years — in many discussions about ballot measures — that they prefer to keep the average annual tax below $100. They do not appear to have accomplished this in the case of Measure O if the city’s own budget projections are accurate.

Last week, the mayor said he was not aware of any questions about the figures used in the Measure O ballot language. He asked people in attendance to email his office with their calculations, and said it had been the city’s finance department that had provided the numbers for the bond. He also told attendees that, over time, existing bonds will expire so their tax bills should go down.

City spokesman Chakko emphasized this week that, ultimately, the most important figure for property owners to focus on is the $23 per $100,000 estimate. That will allow voters to calculate an accurate figure on their own on the spot while they’re voting, he said. Chakko said not all jurisdictions are as transparent as Berkeley in this regard: “Our goal is to help the voter. The voter is going to know what their own assessed value is.”

Chakko said, if the city brings in more money than it anticipates from a bond in any given year, it will adjust the tax rate accordingly.

On the question of why the annual cost for Measure O is set to increase from $23 to $33 beginning in 2025, Chakko said — speaking generally — the city tries to keep the average tax rate roughly the same from year to year. So, if other bonds expire and there’s a gap, the city will make adjustments to keep the tax rate even.

Generally, that means the annual figure “typically goes down over time,” which is set to be the case with T1, for example, Chakko said.

He did not speak specifically to the Measure O jump, from $23 to $33, other than to say the annual fee would drop from $33 to a lower number after 10 years.

Other measures on the ballot

Two other Berkeley measures are also coming before voters in November: Measure Q, “Amendments to the Berkeley Rent Stabilization and Eviction for Good Cause Ordinance,” and Measure R, an advisory measure focused on the city’s “Vision 2050” smart growth plan “to achieve a more resilient and sustainable infrastructure system.”

If approved by voters, Measure Q would preserve existing vacancy rent adjustments but exempt newly-constructed buildings for 20 years, and exempt both in-law units and the main houses they’re attached to permanently. The first two elements would only go into effect if the Costa–Hawkins Rental Housing Act is repealed at the state level through Proposition 10.

No one has submitted arguments in opposition of either Q or R.

More resources