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At least two major properties built by prominent developer Patrick Kennedy are not paying Berkeley special fees and assessments, according to Alameda County property tax records and officials interviewed by the Daily Planet. 

Barbara Gilbert, a former aide to ex-Mayor Shirley Dean, raised the issue at Tuesday night’s City Council meeting when she declared, “We know the Gaia Building is not paying local assessments.” The accusation brought a stunned hush to the crowd at Council chambers. 

The Gaia Building, at 2116 Allston Way, is a downtown commercial/apartment complex built by Kennedy’s Berkeley development firm, Panoramic Interests, which is headquartered in the building. 

Acting City Manager Phil Kamlarz appeared surprised by Gilbert’s charge, responding to a request for clarification by Mayor Tom Bates that some portion of the Gaia Building “may be a nonprofit and therefore partially exempt, but it’s a mistake if they’re not paying taxes.” The complex does not claim non profit status on the county tax rolls. 

Kennedy, the founder of Panoramic Interests and a Piedmont resident who regularly contributes to candidates and campaign measures in the city of Berkeley, was curt in an initial interview two days after the meeting, saying that he knew nothing about the Gaia’s tax situation, and refused to give the Daily Planet access to anyone in his company who might know. 

“This is news to me.” Kennedy said. “I haven’t seen our tax bill. I don’t handle that.” Kennedy said that the company’s accountant handles its tax payments, but when asked how the Daily Planet could get in touch with the accountant to ask further questions, Kennedy said, “We don’t discuss financial matters relating to our project, to be honest with you. But I’m interested that you mentioned it. I’m going to take a look at it.” 

Kennedy later called back to say that “I’d like to say for the record that if there is an oversight on the part of the city, we’ll settle it, of course. I’m looking into it to see whether there is in fact some kind of oversight on the part of the assessors or anyone else. I know that we are current in [tax payments for] all of our properties.”  

The developer told a reporter “you are the first guy who told me about this.” 

A check of county tax rolls also revealed that Kennedy isn’t paying the special city assessments on another of his properties, the Berkeleyan, located at 1910 Oxford St. 

Heather Murphy, the City of Berkeley’s Revenue Collection Manager confirmed that both the Gaia Building and the Berkleyan are not currently being billed for Berkeley property fees and assessments. 

Murphy said that the Gaia Building is not being taxed by the city because it has not been issued a final use permit from the city’s Planning Department. But Murphy said that the city issued a final use permit for the Berkeleyan in July of 2000. 

Adding city fees and assessments to the Berkeleyan’s tax bill “kind of fell through the process in the communication between the building permits section and the Finance Department. It’s a process we’re still working on refining. [The Berkeleyan] should have started being assessed by July of 2001. And so we will be back billing them for those assessments.” 

Both the Gaia Building and the Berkeleyan are currently being billed for Alameda County property taxes as well as for special county fees and assessments, and there is no indication that Kennedy’s firm hasn’t paid for what it’s been billed.  

While city fees and assessments are paid through the property tax bill generated by the County Auditor’s office, supplying the information needed to generate the city’s fees and assessments is solely the city’s responsibility. 

Speaking of the Gaia Building, Murphy said that her office was already “looking at the building” as part of a regular reassessment process even before last Tuesday’s Council meeting. 

“Since we came to the realization that they do have a temporary certificate of occupancy,” Murphy explained, “we are now going back to assess how much of that square footage has actually been used or has been released to be used under the temporary certificate. We have all intentions of going back and billing them for the current year, and for last year.” 

But Murphy said that an investigation by her office showed that the Berkeleyan had not been placed on a list of properties to be reviewed for Berkeley fees and assessments prior to the Daily Planet’s query about the property. “It will certainly now be scheduled for review,” she said. 

Murphy also said that the city’s Finance Department was currently considering changing its procedure so that buildings with temporary occupancy permits can be billed immediately. 

Variables in how properties are assessed make it difficult to say exactly how much either the Gaia Building or the Berkeleyan owes from unbilled city fees and assessments. 

However, medical offices at 2850 Telegraph Ave. have a taxable value ($12.5 million) that is roughly equivalent to the taxable value of the Gaia Building ($12.4 million). The 2850 Telegraph property currently pays more than $49,500 per year in Berkeley property fees and assessments. 

And at $6 million apiece, both the Berkeley Bowl and the building at 1600 Shattuck Ave. that houses a Starbucks franchise have roughly the same taxable value as the Berkeleyan. The Starbucks building pays close to $19,000 per year in Berkeley property fees and assessments; the Berkeley Bowl pays more than $44,000. 

The Gaia Building was completed in 2001 and has operated under a temporary certificate of occupancy since that time. The Berkeleyan was completed in 1998. 

Gilbert raised the issue of the Gaia Building’s tax status after charging that Berkeley is not taxing significant portions of its tax base, primarily properties owned by nonprofits, during the council’s Special Session on Ballot Measures, called to consider a ballot measure to raise Berkeley property taxes to make up for an imminent budget shortfall.