Antioch City Council Agrees to Move Forward With “Landlord Tax”

The Antioch City Council agreed in a 5-0 vote Tuesday night to move forward with a “per unit” tax on residential landlords.

After a year of discussions that went nowhere between the City of Antioch, the “Friday Morning Breakfast Club”, the California Apartment Association, and the Chamber of Commerce, the Antioch City Council made the final decision on the terms of the tax.

The Council agreed that single-family home rental will cost $250 per unit while multifamily apartments and condominiums will cost $150 per unit. The council estimated final approval to adopt the language in June which will place the initiative on the November Ballot.

Since the funds from this measure will be placed in Antiochs General Fund, it will require a 50%+1 voter approval for it to pass.

Prior to the Council’s decision, Antioch City Manager Steve Duran explained he was unable to get all parties to agree on terms.

“I am always an optimist but was not going to bet my Giants tickets that we would come to an agreement because they were so far apart,” explained Duran. “There was a line in the sand by apartment association which is we will not accept any per unit tax whether its $1 or $500. The apartment owners never moved from original position.”

Duran also told the Council the Antioch Chamber of Commerce was against raising the business license tax from $25 to $100 and agreed they would only support raising the business tax to $50. Staff is now recommending they raise the business tax, but exempt home-based businesses and leave them at $25.

What you directed us to do was meet with Chamber of Commerce and see if they would agree to minimum business tax to $100 and would not include Landlord Tax. The Chamber came back and said they would only agree to raise business tax to $50. In response,  staff is recommending we go to the $100, but exempt home based business and leave them at $25. Chamber has not weighed in on this proposal.

Duran also had strong words for the California Apartment Association.

“It’s not fun to raise taxes, they are not popular but the fact is the City of Antioch has a revenue problem,” said Duran. “The apartment association feels like they are getting picked on, but I feel like I am picked on every April 15 because I pay more than others. The apartment complex is getting picked on because they make a lot more money than a single-family residential landlord.”

Antioch resident Fred Hoskins explained how Antioch has become a City of rentals and rent is a business. He explained that the Apartment association will have a problem with any rate proposed.

“I think $250 is fair,” said Hoskins. “I think its fairness across the board for business. I think we need to move immediately on this, don’t hesitate and go for It. this is a no brainer, get it on the ballet. It will pass.”

Joseph Zamora stated he was against anymore taxes on small investors and said that they will have to increase rent if a tax is implemented.

Gerald Lenhart called the landlord tax unfair and a taking of a single group.

“Tenants are tenants for a reason and this is shoving the burden back on the tenants. I wish you would reconsider this instead of putting it on the ballot and find another way,” said Lenhart.

Mary Littleton said she was in favor of the assessment tax on rentals because it’s a business.

Joe Lawton, a property manager of the Village at Parkview on Gentrytown Drive shared that an increase on 85-units would be an estimated $20,000 increase. He explained that this increase will mean less improvements and less upkeep on the property.

“Where did this come from,” said Lawton. “The fix is in! The rental property owners are the scape goat and being singled out. We cannot support this. We want to see a broader solution and not get picked on”

Amanda Thomas, a Property Manager, stated she is against multifamily landlord tax calling it excessive and a financial burden. She explained how they tried to pay a business licensee and Antioch told them it was unneeded and not to do it.

Thomas further explained that on their property, if the measure passes in November, on that very day the property she manages will have $250,000 less value which means less property tax for the City of Antioch. On top of the less valuable property, they would pay $10,000 in additional fees.

Another property manager spoke stating this tax would add an additional $45,000 a year in fees and called it a 1,500% increase.

Theresa Karr of the California Apartment Association restated her Associations opposition to the tax per what was proposed on the staff report calling it a tax that was 2,000% hire than any other business tax.

She further shared that the current proposal is not an accurate portrayal of their business and encouraged the Council to look at the unintended consequences such as less maintenance on properties, reduction of property value which reduces the property tax Antioch collects.

“This is putting a Band-Aid on a more serious problem. The City will be the bigger loser,” said Karr.

Alex Aliferis of the Contra Costa Taxpayers Association suggested that the City of Antioch follow the City of San Jose and look at pension reform as a way to reduce the city’s burden. He called raising taxes a way to pay for pensions. He quoted articles from local newspapers about increased police salaries and pensions as well as costs of hiring officers.

“It’s a real issue this city needs to face. You are crowding out services to pay for pensions, that is why you are targeting rental tax,” said Aliferis.

Hans Ho said he supported the tax explaining that he owned rentals in other cities and he paid a tax.

“You bet I make a good living in my rental income and that is how I afford my vacations, ski passes, and all the cities I own rentals I pay a license fee which range from $150 to $300 a year. It’s a paid business,” said Ho.” We spent more than that at Starbucks every week. Put it into perspective.”

Marty Fernandez said rentals are a business and make money so they should be taxed.

“I hear boohoo stories, I wish I still had my rentals and they are making hand over fist, everything is a write off. They will pass this onto the renters. Maybe they will move out who can’t afford it. This is a business and they haven’t paid their fair share…. Let’s get even,” said Fernandez.

Upon completion of public comments, City Manager Steve Duran issued a clarification on some of the accusations made by speakers.

Duran explained that if you have an apartment with rent of $1,250 per unit per month, you have to go up 1% to pay for $12.50 per month tax. If a single family rental of $1,800, you have to raise rent by 1.1% or $20.83 per month.

“Somebody said $45,000 in additional cost. If a rental is making $4.5 million per year, that is 1%. If I am making $4.5 million, am I going to complain if I pay $375k additional?” asked Duran.

He explained people are looking at this the wrong way.

“Everyone is talking about what they are paying, but they are not telling you what they are making because it is a lot of money. I am not going to feel sorry for them,” said Duran. “If they don’t have a plan, they need to be quite. They are squealing over 1 and 1.2%.”

Mayor Pro Tem Mary Rocha shared that a year ago she was willing to support it and today her feelings have not changed.

Councilman Tony Tiscareno echoed Rocha’s comments stating the compromise proposed by City staff was fair.

“I started thinking about this and find some sort of fairness for everybody. Our licensing system is outdated. We are trying to promote business and not scare them out; I don’t think this does that,” said Tiscareno. “This isn’t a political issue; this is the right thing to do and fairness for all the citizens because it benefits all the cities. Increased revenues that is going to produce a lot of money I can live with it and support it.”

He further stated he had hoped all parties would come to an agreement.

“I was hoping everyone would come together and that didn’t happen and we are at a time where it’s getting late and we need to act on something and this is the time to do it, “ said Tiscareno. “I support it”

Councilman Gary Agopian said he was an early supporter of this tax and that has not changed.

“I haven’t changed my mind. It is a great business owning real estate and renting it out. There is so many tax advantages, they are great advantages which is why the smart people want to buy property and that is why there is more in Antioch than ever before,” said Agopian. “We need to help them make money, but at the same time I feel an obligation for us to all benefit from the making of that money in a very small way. Truly what is being proposed in Antioch on an average rent for 2-bed property or 3-bed we are talking about 1% increase. You and I know that if the market will bare it, we will pay it. That is the free market. If the market won’t bare it now, then it won’t bare it for now, but eventually it will if not already. “

Agopian shared how he did not feel this proposal was excessive and will be a benefit for the city.

Mayor Wade Harper said the Council looked at it a year ago and asked the California Apartment Association for a whole year for a compromise to be brought to the table. He scolded them for continuing to draw a line in the sand and oppose any increase.

“We gave the California Apartment Association a whole year to come up with compromise,” said Harper. “Bring back something to look but we didn’t get anything. I don’t think its unfairly picking anyone out. People don’t see that other cities apartment, landlord’s owners, they pay it but in Antioch they are scot-free now we have to pay our fair share. You don’t see it like that but I see it as paying your fair share. I am disappointed you didn’t bring numbers to us and continue to draw line in the sand. Come on, work with us, give us something but we are not getting anything. I think this number is reasonable and the city needs it.”

The Item will come back for final approval in June.