The city will likely suspend its program to help the poor avoid homelessness if voters reject a November ballot initiative increasing the tax on real estate transactions, city officials said.
Measure M would raise about $2 million annually from a 0.5 percent tax increase on the sale of property. The current transfer tax is 1.5 percent.
Property sold for less than $350,000 or at a loss would be exempt from the 2 percent tax, which would be the highest transfer tax in the state.
Twenty percent of the tax revenue, or roughly $400,000, will go to the city’s financially strapped Homelessness Prevention Program.
Provided with an annual allotment of $110,000 in city funds, the program is now teetering on the brink of insolvency.
“It’s going to run out of money sometime between Thanksgiving and Christmas,” said Berkeley Housing Director Stephen Barton.
The program, operated by the non-profit Echo Housing, provides temporary assistance for residents who are at risk of losing their home and helps others pay initial move-in costs so they can get subsidized housing.
“If it wasn’t for this program, a lot more people would be homeless right now,” said Marjorie Rocha, executive director of Echo Housing.
Barton recalled a recent case in which a disabled person, whose mother paid his rent, was almost evicted after his mother died. The fund paid his rent during the three months that it took him to win in a federal disability housing subsidy.
“In terms of human value and preventing real tragedies, this is one of the best programs the city has,” Barton said.
But the program’s success could mean it’s downfall.
Rocha said that in the last four months the program spent $51,000 helping 41 families, and could have helped far more if the funds were available.
With city support restricted by a $2.1 million budget deficit, the program’s future depends on the transfer tax increase.
If the ballot measure, which requires two-thirds approval of city voters fails, Barton said the housing department will likely have to shelve the program until the next round of city funding in July.
Rocha warned that the cost of scrapping the program would be higher than funding it.
“Programs for the homeless are much more expensive than to help people keep their homes,” she said.
In addition to the homelessness prevention program, the ballot measure also earmarks about $1 million for the construction of affordable housing and $600,000 for seismic upgrades of the roughly 4,000 apartment units that might not withstand a major earthquake.
Barton said $1 million dollars would mean about 47 new housing units for the approximately 4,700 people on Berkeley’s affordable housing wait list. He added that increased affordable housing reserves would qualify the city for state matching dollars.
According to Barton, the city doesn’t have a program for retrofitting apartments. “It would make a big impact,” Barton said, noting that many property owners don’t know if their building is earthquake prone.
He noted that the money raised could be used to help pay for engineering studies so the city and owners could have an accurate sense on the extent of the danger.
Opponents of the tax say they do not oppose the programs, but in the manner the city is choosing to fund them.
“There are 600 [home] transactions in Berkeley. It’s not fair to put the entire burden of affordable housing on 600 people,” said Miriam Ng, president of the Berkeley Association of Realtors.
She added that the tax will likely be an unreliable source of income. “Just cause the market is good, they think they will get a lot of money, but when the market turns and there are no transactions, then where will they get the money.”
Ng said that if the ballot passes, she will file suit arguing that the tax violates California law prohibiting real estate taxes for special projects.
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