Voters Decide on New Tax Measure Designed to Help Oakland’s Homeless

Nov 5, 2018 | Blog

homeless man on streetThe homeless rate in Oakland, California has increased dramatically over the past decade. City officials and those who work for nonprofit organizations to help the homeless have stated that more affordable housing should be built, but this type of construction takes years to complete. Therefore, they claim other action must be taken to solve the present crisis.

This month, Oakland voters may approve California’s first tax on privately-owned vacant properties. Proponents of the tax have stated that the city should discover whether or not vacant land can be used as shelter for the homeless. It is estimated that as much as $10 million could be raised on a yearly basis for homeless services, and that illegal dumping would be discouraged as well.

If the measure is approved by a two-thirds vote next week, property owners who use their parcels less than 50 days a year would be required to pay up to $6000 a year in taxes.

Some people argue that it is not right to penalize people with additional taxes for owning a vacant lot or building because the city makes it difficult to complete new construction: Oakland’s sky high construction costs, which equal approximately $200,000 for each thousand square feet, are regarded by some as a stumbling block to those who would like to do something with their vacant properties.

According to Oakland’s Planning and Building Department, permit fees alone for a standard three-bedroom dwelling can run as high as $25,000. Other people are of the opinion that if the owners of such properties are faced with high tax assessments each year, they would simply sell their parcel to a developer, which would defeat the purpose of trying to use such real estate to provide shelter for homeless individuals.

Some members of the city Council believe that the majority of the owners of vacant properties are holding onto them as a speculative investments due to Oakland’s thriving real estate market. Some believe the new tax would motivate property owners to make a decision about whether or not to sell or use their lot or building.

According to Oakland’s finance director, Katano Kasaine, if the measure is approved, approximately 4400 empty lots, plus an unknown number of industrial, commercial and residential buildings would be subjected to the new tax. However, critics cite a lack of clarity, stating that it is not fair to ask voters to make this decision as soon as Tuesday. They claim that it is too early to tell whether such a measure would be helpful or merely disenfranchise many small Oakland property owners and that more discussion is necessary before the measure goes to referendum.

Many land use experts state that they are supportive of the concept of the tax, but how the city would put into action would ultimately prove its effectiveness one way or another.

Sarah KarLinsky, a consultant for SPUR, states that people have concerns regarding how the measure would be implemented, beginning with the definition of what the city considers vacancy. SPUR is a think tank in the San Francisco Bay area that focuses on urban planning.

Our tax attorneys in Oakland have been monitoring this new tax regulation, and have learned that it would take effect in 2020. This time frame gives Oakland a chance to create a registry of properties and decide on a specific definition regarding what constitutes vacancy. Low income owners and nonprofits would be exempt from the tax, as well as property owners able to prove financial hardship.

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