Every Member of the Berkeley City Council Supports Measure U1
We All Win with U1
Summary of Measure U1
- Taxes the more than $100 million in excessive rent increases imposed on Berkeley tenants by raising the Business License Tax from 1.08% to 2.88% of gross receipts
- Creates $4 million annually in new revenue for affordable housing and homelessness prevention programs.
- Prevents pass-through of the tax increase to 99% of tenants.
- Directs the Housing Advisory Commission, a citizen oversight committee of people with expertise and experience in affordable housing, to advise the City Council on how best to spend the money and track how it is used.
- Will cost the average landlord $30 per unit per month, far less than their last vacancy rent increase.
- The tax hits the excess profits of larger for-profit residential property owners and does not affect small owners with less than 5 units.
- Does not increase the tax on units occupied by long-term tenants still paying a fair rent.
- Does not increase the tax on new housing for the first twelve years after the Certificate of Occupancy is issued to avoid discouraging new construction.
- Exempts units rented under the Section 8 and Shelter Plus Care rental assistance programs to encourage landlords to rent to low-income tenants.
Fund Affordable Housing in Berkeley with a Windfall Profits Tax on High Rents
“Skyrocketing rents are creating severe hardships for tenants and windfall profits for landlords. More than $100 million in excessive rent is being drained from our community every year. It is only fair that we recover a small part of that windfall through a tax and use it to provide non-profit housing so that seniors, people with disabilities and low-wage working people can afford to stay in our community” said Stephen Barton, Ph.D., retired Berkeley Housing Director.
“Recent polling showed that 71% of Berkeley voters consider affordable housing a very or extremely important area for the City to invest in. We are confident that if we get our message out to the residents of Berkeley we will be able to pass the proposed tax increase in November,” said a joint statement by Council members Jesse Arreguin and Laurie Capitelli.
Increase the Business License Fee for Owners of Residential Rental Properties. On November 8, 2016 the voters of Berkeley will have the chance to pass Measure U1 to raise the business license tax on residential rental units by 1.8% with an exemption for small landlords with less than 5 units. The measure will cost the average landlord $30 per unit per month and raise $4 million annually for affordable housing and homelessness prevention, rising as rents continue to rise. The measure will direct the Housing Advisory Commission, a citizen oversight committee of people with expertise and experience in affordable housing and homelessness prevention to advise the City Council on how to spend the money.
The tax cannot be passed on to tenants. Most tenants are protected by the city’s Rent Stabilization Ordinance. The small fraction of tenants in newer buildings that are exempt from rent stabilization are already receiving rent increases as high as the market will bear. The owners may claim they will raise the rent if the measure passes, but the reality is that they will raise the rent just as much even if it doesn’t pass.
The measure exempts income from units occupied by long-term tenants with moderate rents. In order not to discourage new construction, it allows a 12 year exemption from the increase starting with initial occupancy of the building.
Background: Landlords in Berkeley now collect $82 million a year more than they did just five years ago, a massive transfer of income from tenants to landlords. Economic studies show that since the State of California imposed “vacancy decontrol” in 1999 (allowing landlords to raise rents without limit whenever a tenant moved out of a rent stabilized apartment), tenants are paying landlords an extra $100 million a year over and above increases necessary for rents to keep up with inflation. This transfer of income from Berkeley tenants to landlords, the majority of whom live outside of Berkeley, drains money from the community and increases demands for public services of all kinds, from social services to subsidized housing to emergency rental assistance to prevent families with temporary financial troubles from falling into homelessness.
“This ballot measure is based on an important economic principle” said Stephen Barton, Ph.D., retired Berkeley Housing Director and recipient of a National Planning Award from the American Planning Association for his work on housing. “The real estate industry has a saying that the three things that determine whether real estate will go up in value are ‘location, location and location’. But it’s not the land owners who make Berkeley a valuable location. It’s the public, homeowners and renters alike, who make it valuable by investing in the University, in parks, in transit and by making Berkeley a great place to live. Then real estate investors get to charge tenants higher rents for value that is created by the public. Nothing could be more appropriate than to tax this unearned income and reinvest it in affordable housing and preventing homelessness for the tenants who are most harmed by high and rising rents.”