Antioch: Business License Tax Ballot Measure Heads to November Ballot

After a year of discussion, the Antioch City Council voted 4-0 Tuesday to place a Business License Tax Ballot Measure for the November 4, 2014 election.

The tax will do the following:

• Impose an annual business license tax on residential landlords on the rental or leasing of: detached single family dwelling units at $250 per dwelling unit and attached multi-family dwelling units at $150 per unit
• Maintains the existing business license taxes for all other business, with an increase in the minimum tax to $100 for those businesses subject to the gross receipts tax formula, except for certain home occupation business, for whom the minimum tax will be $25 per year.

The City is hoping the measure passes to add to its General Fund which is $43,046,381 with a population of 106,455 people—the General Fund has seen a $13 million decrease since 2007. It’s estimated that the proposed residential landlord business license tax and increased minimum tax will generate approximately $2.3 million annually in additional revenue for the General Fund based on a approximately 11,500 total residential rental units, but will be offset by approximately $300,000 in costs to administer the additional tax.

Here is a recap of Tuesdays discussion:

Marcus Thompson, Twin Creek Communities, argued to the Council that they paid $161,000 in Property Taxes last year and spent millions over the last five years renovating and improving the look of the complex to make it more beautiful. He argues this tax will slow progress.

“Let’s be honest that increasing the property operating expenses its going to increase rental rates and for Twin Creeks that is a sum of $36,000 a year. Ultimately these cost are going to go back onto the renters,” said Thompson. “Now if we take these funds from the other properties and the money to rejuvenate these properties are going to stop and they are not going to do these upgrades to make Antioch look like a more beautiful and appealing place to live are going to stop. Doing this is going to slow progress and ultimately this burden should fall on all of Antioch, not just a small portion of renters that are ultimately going to have to pay this bill.

Amanda Thompson argued on behalf of a Senior Living facility that if this tax is passed, they will be paying more than their fair share noting that they paid $180,000 last year in property taxes.

“This proposed tax would increase that by $23,000. He is not against paying more for better public safety services, but only if levied on all property owners that benefit and the increase is temporary and expires when as overall city revenues recover,” said Thompson.

Clifford Gatewood, an apartment manager for a 136-unit facility in Antioch, urging the Council not to approve this resolution on the Ballot because the property he manages its going to cost them more than $20,000 a year. It would also increase rent by $12-20 per month.

“We pay our taxes, we pay our business license, if this tax goes forward it will be levied to the people we try and serve,” said Gatewood. “What we are going to end up doing and it gets improved is you are going to run a lot of people out of this town who have nowhere else to go.”

He also explained how operating costs are barley being met with rent and that they cannot afford a rent increase.

Mark Jordan, a 50-year-resident who says he does property management and own properties

“What you have is a structural deficit that cannot be filled with hope; it has to be filled with money,” said Jordan. “Its easy to stand up and say we should tax everyone, but the reality that folks like myself who have worked hard and who have been lucky and have a net worth simply have to pay more to provide services to the town they live in.”

He explained that most of the people who speak tonight do not live in the town and that they take the money and spend it somewhere else. He says people who work for the property owners are paid to say what they will tonight.

“I live here, I know what the town looks like, you know that we have a monetary problem, do I like taxes, well no! I like Mr. Agopian belong to the minority party in this part of the county but I am still in favor of this tax,” said Jordan. “Why? Because 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 is reasonable and sound that will produce enough money to fill the structural deficit. Let the people decide and let’s put it on the ballot and don’t let saber rattling dissway you. Vote yes and see what the public has to say.”

Theresa Karr, California Apartment Association, asked the Council to say no on placing this resolution on the November election ballot.

“The direction we were given last year was to review and work with other stakeholders to identify sustainable, equitable revenue resources with the city that you could possibility implement,” said Karr. ”While we were there, there were two options that were on the table with no compromises from either side. One was the residential landlord tax initiative which represented $2.8 million. There was a comprehensive moderate business license ordinance tax change that was offered but it wasn’t $2.8 million, it was $1.3 million. We agree that rental properties is a business and they should pay a business license tax like any other business to fund municipal services to the business.”

Karr explained that multi-family owners have been paying their business tax just like every other business but the single-family residential have not but the city could easily fix that false impression that they were given.

“We want to know why the business of rental housing be treated significantly different and their fair share of the business license tax at 2000% higher than any other business in the city,” asked Karr. “We are not objected to a tax, but we do not believe the city has adequately made the connection as to why it’s okay to tax rental property 2000% higher than any other business license payer in the city. The $2.27 million fixed position before you was not a compromise.”

Joshua Howard, Senior Vice President of Government Affairs at the California Association of Realtors, he called the tax unconstitutional.

“We would argue that the tax before you is unconstitutional. We have questioned its legality and we ask that given that subject, some significant legal challenge in the two letters we have sent you we have outlined several of those arguments,” said Howard. “The most compelling argument is that the tax does violate the constitution’s Commerce clause… in the Staff Report that has been presented we are not seeing the clear nexus between the fee being proposed and the services that will be received.”

He asked the Council to re-open the dialogue for one day to find a compromise.

Terry Ramus called Mr. Howards presentation of the Constitution and explanation of the Commerce Clause a “Elementary presentation of the law” and encouraged the council to move forward with putting the tax on the ballot.

“I think it’s time, it’s been in discussion for a couple of years and suddenly some folks want to have a one day attempt to compromise but this has been going on for a couple of years and it’s time to send it to the voters and have them decide,” said Ramus.

Fred Hoskins took offense to Mr. Howards claim that a tax on rental property was unconstitutional.

“I guess if we have taxes now that exist on rental properties of any kind then I guess that is unconstitutional. But what are we trying to do here, basically to make things equal,” said Hoskins. “We have become close to city of rental properties. Now we are going to balance the books basically and make things equal, but that is not unconstitutional.”

He also explained that when you put something up for a vote before the citizens, you are not making the decision, the citizens are.

“When I hear that phrase, it infuriates me,” said Hoskins. “But I am sick and tired of listening to apartment owners jumping in and imposing unconstitutional fear tactics. No, don’t buy it. Please vote yes.”

John Canning argued that if rental business are unable to successfully raise their rates and fill apartments, you are looking at a drop in property value which in turn then reduces the City’s share of property taxes on these properties.

“You have to look at the condition of the city three or four years ago when these investors were coming in when no one else was buying. You are penalizing them because they bought. What you have now is people buying as families, but those investors who are capitalizing also invested in your city at one point in time to bring it back to where you are, yes they are going to make money on appreciation, but you wouldn’t have the tax roll that you have today.”

Canning explained that because of the investors, they helped bring up property values and created today’s environment of people buying homes and moving back into your community.

“You have to watch what you are doing. This tax is not necessarily a good thing as it will affect the values later tonight,” said Canning. “You are bidding out your water front later tonight and you are looking at multi-family, well how does that work? You want to tax us for being different but you want us to fix your waterfront and help us generate more revenue. I don’t understand. Please don’t vote for this.”

Councilwoman Monica Wilson asked the City Manager Steve Duran about the negotiations.

“Once I was willing to compromise, the other side was not. So that is where we are today,” said Duran. “It just seemed like a delay. I’ll be blunt, I’ve been a negotiator for most of my career and you can’t get your way you just delay. So what we saw before us this evening is we still want to talk. Well what they want you to do is just not get it on the ballot and they have a had a year and a half to come up with something and they have never put something on the table.”

Wilson asked it seemed like the citizens who started the petition were going to compromise, or at least that it appeared that way. Duran responded “yes”.

Mayor Wade Harper asked if the City of Antioch has received a proposal from the California Apartment Association. The City Manager responded “no”.

“They are doing what they are supposed to be doing. They are vigorously representing their client. I am sure they vowed to do that and they are doing an excellent job and that is exactly what they are supposed to do,” said Harper. “But I vow to represent the citizens of Antioch and to forget any personal agenda and do what is best I think for the City of Antioch.”

Harper explained that after a year, there should have been a proposal or comparable data on whether the tax proposal was too high or too low.

“After a year, they ask for 1-day of dialogue, this is the day right here. It’s been a whole year and having meeting after meeting and no proposal. The Apartment Association contributed to Measure C and helped us out,” explained Harper. “It bothers me that Antioch is the poorest in the county when it comes to taxes. Some of the things I was looking for from the Apartment Association was to look at your clients and see where the cities are charging a per-unit fee and tell me our fee is too high. Tell me it’s a little to low, something. Give me a table to show me what all your other clients are paying and come with an honest proposal.”

Mayor Harper said the right thing to do for Antioch was to put this before the voters.

“I believe it’s the right thing to do, I believe we need to put it before the voters. One thing they have to look at is there clients have not been paying this tax for several years and their clients have been getting off scot free and there comes a time where they need to pay their fair share,” said Harper. “I think this is something that they need to do and I am going to support the rental tax 100%.”

Councilman Tony Tiscareno added that it’s time to let the voters decide.

“It disturbs me a bit that we are getting a letter from attorney’s from associations that want to work with us now,” said Tiscareno. “We have been trying to do that for a year. I might even listen if there was some kind of proposal within the letter, but I didn’t see that. I think we have all been very patient and listened to all parties, but it’s time to take action. We need to let the voters have the say.”

Councilwoman Wilson said it’s time for the community to decide.

“We are all harping on this one day, but you guys had 365 days. No more days. It’s time for this to go to the voters and time for the community to decide,” said Wilson. “We are not deciding, we are giving it to the community to decide. I am all for this and let’s make this happen.”

Approved 4-0.