Page One

In an attempt to increase Berkeley’s affordable housing stock and prevent homelessness, the City Council approved a measure for the November ballot last month that would boost its housing trust fund by increasing the city’s real estate transfer tax. 

About $2 million would be expected with the proposed 0.5 percent tax increase, exacted on property owners who sell their homes for more than $350,000. The current transfer tax is 1.5 percent. 

According to the city’s Housing Director Stephen Barton, the additional funds could help add as many as 50 affordable housing units to Berkeley’s housing stock annually. 

The city has spent about $16 million in the last 10 years to build 538 homes. 

“Currently there are 4,700 people on the [city] Housing Authority’s waiting list for affordable housing,” Barton said. “And that’s only the waiting list, which doesn’t count people who work in Berkeley and can’t afford to live here or those who are in danger of losing their homes.” 

The transfer tax measure, known as Measure 5, would annually provide about $1 million – 50 percent of the tax hike revenues – for the development of new affordable housing. 

Another $600,000, or 30 percent of the new tax revenue, would be made available for seismic upgrading of approximately 5,000 private homes that are in danger of being rendered unlivable after a major earthquake. According to recent estimates, the cost of retrofitting the units in need of retrofitting – which are mostly apartment complexes of five units or more – would be between $10,000 or $20,000 per unit. This translates to between $50 million and $100 million for the entire city. 

The remaining $300,000, or 20 percent of the additional revenue, would go toward the city’s emergency assistance program for families facing homelessness.  

Supporters of Measure 5 say new affordable housing is desperately needed for low income residents and working people who continue to be priced out of the Berkeley rental and home buyers market. 

They say that the added tax will help the city be proactive in preventing homelessness by upgrading existing housing and helping very low income families who are teetering on the brink of life on the streets.  

Opponents say the proposed tax hike will make Berkeley’s transfer tax the highest in the state at 2 percent. They add that charging such a high tax is “punitive” and is unfair to both home sellers and buyers.  

The tax, they say, could also have a negative impact on the city’s housing market, which is among the highest-priced in the nation per square foot. They also argue that the money raised for seismic retrofitting will be woefully short of funding the retrofitting of 5,000 rental units. 

In dollar terms, the cost of the transfer tax increase will be $500 for every $100,000 of sale price. So on the sale of a $450,000 property, which the Berkeley Association of Realtors says is the average price for a single family home, the transfer tax increase would be $2,250. The total cost of transfer tax for the average home sale would be $9,000. 

According to the measure, homeowners who sell their homes for $350,000 or less are exempt from the new tax. 

“I voted against it because it would make ours the most severe transfer tax in the state,” said City Councilmember Betty Olds, the only person on the council to vote against the initiative. “I would have considered a quarter percent raise but a half a percent is too much.” 

Olds added that the proposed new tax is unfair to homeowners because it doesn’t offer a rebate for retrofitting their homes. 

State Assemblywoman Dion Aroner, who helped write an argument in favor of Measure 5, said affordable housing is one of the most important issues facing the region. 

“The housing market is so hot in Berkeley and homeowners have built up tremendous equity in recent years, I don’t think this tax is going to cool the housing market,” she said. “If there is no new affordable housing created in Berkeley for working people, the very nature of our community will change.”  

President of the Berkeley Association of Realtors Miriam Ng, who helped write the argument against Measure 5, said the supplemental tax would likely send potential home buyers to other cities. She added that the taxes in Berkeley are already too high. 

“Everybody talks about how real estate values have doubled,” she said. “Well that means revenue from the existing transfer tax has doubled. I’d like to know where all that money went.”