Antioch City Council Sends Landlord Tax to Ballot
By John Crowder
At their June 24 meeting the Antioch City Council voted to place a measure on the November 24 ballot that would update the existing business license tax ordinance to include a residential landlord business license tax (Landlord Tax) and would raise the minimum business license tax to $100 from $25.
Prior to the vote, City Manager Steve Duran gave a brief history of the events leading up to the proposed ballot measure that had been prepared by city staff. This was followed by a long line of speakers, both pro and con, voicing their opinions on the matter and statements by the council detailing their positions on the issue.
Duran opened by stating that the idea for the Landlord Tax had begun, over a year ago, as a citizen-led initiative, promoted by the group known as the Friday Morning Breakfast Club (FMBC). He stated that the FMBC and the California Apartment Association, along with other owners of residential properties, had been attempting to negotiate such an initiative with city staff involvement for some time when he started in his role as City Manager. He became involved in the negotiations, partly to “get a feel for what the dynamics of the discussion were.”
“We had a lot of discussions, and didn’t make a lot of headway,” Duran added, noting that the apartment owners were unwilling to agree to a per unit tax of any amount.
Unable to reach compromise, he brought forward a proposal that would place a tax of $250 per year on a single-family dwelling, and $150 per unit per year on a multi-unit property, $90 less than what the FMBC had proposed. With time running out, the council had directed staff to bring the proposal forward for a vote, and that proposal was now in front of the council.
Duran noted the necessity for the tax.
“Antioch is the worst General Fund in the county per capita basis,” he shared.
He said that Antioch obtained about $440 per capita for the city’s General Fund, with Pittsburg being about 45% higher, Concord about 60% higher, and that Walnut Creek was over $1000 per capita and Richmond over $1,100.
“That means that we just don’t have as much money to hire police and code enforcement and parks and rec, and public works and everybody else that has to run a city,” he stated. “We need the money.”
Duran then discussed briefly that the minimum business license tax would also be raised under the measure, but would exempt certain small, home-based businesses from the increase.
During the public comments, speakers representing landlords made several arguments in opposition to the measure. Marcus Thompson of FBI Management, managers of Twin Creek Communities, argued that the tax, if passed, would be passed on to renters who could least afford it, that Twin Creeks already paid $161,000 per year in property taxes, and that renovations that were being made which helped beautify Antioch would cease. Clifford Gatewood, property manager of Riverstone Apartments on Sycamore Avenue, also expressed concern with the tax being passed on to renters who were least able to afford it, and said that the operating costs for the complex he managed were barely covered by current rents.
Theresa Karr of the California Apartment Association (CAA) brought up the issue of equity, stating that the proposed tax would treat those in the business of owning rental property significantly different than other business owners, taxing them at a level “2000% higher than any other business in the city.”
Joshua Howard, the Senior Vice President for Government Affairs at the CAA stated “the proposed tax before you is unconstitutional. The most compelling argument…is that the tax does violate the Constitution’s commerce clause.”
John Canning, a Real Estate broker with WR Properties in Brentwood who was formerly involved in large scale property management, was the final speaker against the proposed tax measure, arguing that margins for property managers were too thin to support a tax increase.
Those supporting the tax included Mark Jordan, broker/owner of Re/Max Preferred Properties in Antioch.
“I’ve lived here 50 years, and I do property management, and I own rentals here in town,” he said. “You have what’s called a structural deficit in your budget that cannot be filled with hope, it has to be filled with money. I have the ability to pay it, I want the city to look better, I don’t want you to go bankrupt, and no one has an alternative idea today that’s reasonable, and sound, and will produce enough money to fill the structural deficit. Let’s put it on the ballot, let’s let the people decide.”
Both Terry Ramus and Fred Hoskins made light of the unconstitutional argument. Ramus said he was a “little bit excited, because it may be unconstitutional for us to pay any of the taxes.”
“I would encourage the city not to be intimidated by that type of thing,” he added.
Hoskins said that the unconstitutional argument, infuriated him. However,, while supporting the Landlord Tax, he objected to the amount of the minimum business license fee increase.
Following the public comments, the council discussed the matter, asking questions of both Duran and City Attorney Lynn Nerland. Council Member Monica Wilson led off by asking Duran about the negotiations with the CAA.
“They did draw a line in the sand, and said absolutely no per unit fee,” Duran responded. “One side was willing to compromise, the other side wasn’t.”
In response to a question by Mayor Pro Tem Mary Rocha, Duran said, “The market sets the rents.” He also said, “(The landlords) are going to raise the rent as much as the market will bear, not more, not less.”
Nerland addressed the constitutionality argument.
“There’s no case that says a city can’t charge a per unit business license tax on residential rentals, or even to have some sort of formula that charges different businesses in different ways,” she stated. “That is not prohibited under the Constitution.”
Mayor Wade Harper and Council Member Tony Tiscareno both expressed support for sending the measure to the November ballot.
“We have about a three million dollar structural deficit that we’re projecting, and we have to do what is best for the city of Antioch,” Harper explained. “I believe it’s the right thing to do, I think we need to put it before the voters.”
Tiscareno concurred with his opinion, referencing an earlier statement by CAA representative Howard.
“They said, give us a day, and we’ll come up with some kind of a compromise. But, we’ve been trying to do that for a year,” he said. “It’s time to take action. I don’t think it’s up to us anymore, I think it’s up to the voters.”
Wilson then made a motion to include the proposal on the November ballot, Rocha seconded it, and the council voted 4-0 in favor.
Whether or not Antioch will have a Landlord Tax on the books will now be decided by the voters of the city, in the November 4 election, based on a simple majority. If passed, it is expected to generate approximately $2.3 million in additional revenue, annually for the General Fund. The cost to put the measure on the ballot has been estimated at about $11,000.
The deadline for submitting arguments, either for or against the measure, is Wednesday, August 20, at 5:00 p.m. Arguments cannot exceed 300 words in length