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Berkeley’s proposed tax on empty homes is premised on the idea that landlords are holding their units off the market to try to force up rents. The problem is that there’s no data to support that.
Measure M on the Nov. 8 ballot would tax housing units that are vacant for 182 days in a year to pressure landlords to rent out the homes. In a city with a low vacancy rate, this measure is a solution in search of a problem. Voters should reject the measure.
The tax would be $3,000 the first year and $6,000 for subsequent years for units in duplexes, condominiums, single-family homes and townhouses. For all other units, the tax would be $6,000 the first year and $12,000 in subsequent years.
The measure contains a list of exemptions, such as homes under construction and owners who use the property as their primary residences. City officials estimate that, after those exemptions, there are 1,100 rental units that would be affected.
Using those numbers and assuming landlords, when faced with the prospect of fines, would place some of the units back on the market, Berkeley officials estimate the city would collect between $3.9 million and $5.9 million annually for the general fund.
But the purpose of this measure should not be generating new tax revenues, it should be increasing the housing supply. Given that, it’s disappointing that backers of the measure did not put more effort into understanding why those empty housing units are not being rented out. Rather than a stick, what might be called for here is a carrot in the form of assistance to landlords who cannot afford necessary repairs.
Only five of the nine council members voted to put Measure M on the ballot, which by itself says something about how shaky the concept is. Among the many arguments, backers suggested that property owners might be holding older units vacant to drive up rents in newly constructed buildings. That intuitively makes no sense.
The underlying implication of Measure M is that there are too many vacant units in the city. Actually, Berkeley and the rest of the Bay Area’s problem is not that the housing vacancy rate is too high, it’s that it’s too low.
As a newly released draft of Berkeley’s Housing Element update points out, “A certain number of vacancies in a community is necessary to moderate housing costs, provide some level of choice for households seeking housing, and provide incentive to keep units in decent condition.”
It turns out that the proportion of units for sale and units for rent are lower in Berkeley than in Alameda County and the Bay Area. That said, council backers of Measure M deserve credit for only targeting homes that have been sitting off the market for months.
But if they really wanted to help solve Berkeley’s and the region’s housing crisis, they would speed up the city’s slow approval of new construction. That’s the real culprit — and Measure M does nothing to address it.
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