Antioch landlord tax measure marches toward ballot

By John Crowder

A new tax measure and an increase in the rate of an older one were the main order of business, and the most controversial items on the agenda, at the May 27 Antioch City Council (Council) meeting.

As previously reported, members of the Friday Morning Breakfast Club (FMBC), a citizens group made up of residents from disparate political backgrounds, but with a shared goal of seeing Antioch move forward as a city, has been circulating a petition to place a residential landlord rental tax on the November ballot.

Earlier in May, City Manager Steve Duran had been directed by the council to meet with this group, and others, in order to develop a revenue initiative that would have broad-based support. During the May 27 meeting, Duran put forward a staff proposal that called for taxing those doing business as residential landlords according to a sliding scale based on the number of rental units owned. The base fee for one unit would be set at $250 per year for a detached home, and $150 per unit for a multi-unit complex. (Under the proposal, an exception would be carved out for homeowners with “in-law” or similar units where no rent is being paid. These would not be subject to the tax.)

The tax proposal presented by staff also included an increase in the business license tax fee from a minimum of $25, as it currently stands, to a minimum of $100. Under the proposal, an exception would be carved out for home-based businesses, with their minimum business license fee remaining at the $25 level.

Predictably, both tax ideas were met with opposition. During the public hearing on the proposal, several individuals representing apartment complex owners and owners of residential homes derided the rental tax proposal, calling it unfair, and claiming they were being picked on because of a perception that they were making a lot of money. Theresa Karr, of the California Apartment Association, summarized her organization’s position following the meeting.

We felt like it should be a broad-based business license tax, instead of 90% on the apartment owners,” Karr said. “We felt like it was an unfair tax. We’re being singled out, one business in the city, to find $2.27 million.”

Dr. Sean Wright, CEO of the Antioch Chamber of Commerce, spoke in opposition to the increase in the business tax. He pointed out that, by increasing the minimum business tax, Antioch would make it more difficult for new businesses to open here as opposed to Brentwood, or elsewhere. “What we’re going to do is let businesses know that, as they’re starting, we’re going to make it harder for them,” he said. “We believe that the way to increase revenue in the city of Antioch is to open more businesses…”

That $100 minimum is really only for those start-up companies. Are we going to be open for business in Antioch?” Wright asked. “We need a competitive advantage, and one of the competitive advantages we have is a small startup cost.”

Alex Aliferis, Executive Director of the Contra Costa Taxpayers Association, was also on hand at the meeting and spoke against the rental tax. He addressed what he considered the impetus for the tax proposal, spiraling expenses, in particular, rising pension costs for public employees. He said that, along with other California cities, Antioch has spiraling pension costs and that these were the cause of another nearby city, Stockton, filing for bankruptcy.

He next quoted from a 2012 article entitled Antioch Rushing to Increase Pension Benefits, which he said discussed Antioch increasing retirement benefits while “drowning in $59 million in unpaid debt.” He went on to say that the amount of unfunded pension liability, “has probably increased by now.” Aliferis then quoted from the April issue of the Antioch Herald, a statement attributed to City Manager Steve Duran regarding a 37% increase in the cost for a police officer. Aliferis called pension reform, “a real issue that this city has to face.”

You’re crowding out services to pay for pensions,” he concluded, “that’s why you’re targeting for this rental tax.”

Not all citizens spoke in opposition to the proposed measures, however, Several, including Antioch citizens who are rental property owners, spoke in favor of the rental tax measure.

I am a landlord, I own rental property, none of which is in the city of Antioch. I have to pay a license fee in other cities. It is a business,” said Former Police Commissioner Hans Ho. “You bet you, it is a business. Businesses pay a license tax. Please, put it into perspective, we’re talking about $20 per month.”

Another resident, Clay Baskin, expressed a like sentiment. He stated that rental units have paid a disproportionately low rate, but use a disproportionately high rate of services.

We don’t feel safe in this town because we don’t have enough police officers,” he stated. “The landlords are going to pass it along.”

He also said that renters would ultimately benefit from the tax because (with increased police protection), “They’ll feel safer for it.”

Duran, who addressed both measures during the council meeting, expressed particular frustration in dealing with the apartment owners, saying that, “They drew a line in the sand, and wouldn’t agree to any per unit tax.” After the meeting, he elaborated on his position.

Residential landlords are making a lot of money here in Antioch, both in terms of cash flow, and asset appreciation,” he said. “It’s time they pay their fair share.”

Following discussion by the council, in which all members expressed support for placing a tax measure on the November ballot, they voted 5-0 to direct staff to prepare a measure to take before the voters. The draft of this measure is to be brought before the council for approval in June.

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