Editorial: Nonprofit Critical Mass

Becky O'Malley
Tuesday November 11, 2003

The November issue of BDA Update, the monthly newsletter of Berkeley Design Advocates, a group of architects and others who work in the local building industry, has an interesting article on its front page, entitled “From Impalas to Incense”. It reports on a proposal by the Buddhist Church of America to add yet another nonprofit institution to the Southside area. The article reports that the church has bought the old Howard Automobile showroom on the corner of Fulton and Durant, and plans to turn it into a Buddhist Studies Institute, complete with a bookstore, offices, classrooms and dormitory spaces.  

Evidently the church wants to build two additional stories on top of the landmark building, which was restored not too long ago by previous owners who hoped to use it for commercial research and development. The Zoning Adjustment Board vetoed that use, which is probably why the building was sold to the Buddhist Church. A presentation of the church’s plans was well received at BDA’s October meeting, except that audience members thought that too much parking was included (28 cars), and the proposal was criticized for “not maxing out the site”—the building would rise only to three stories, not the four “allowed,” according to author Tony Bruzzone.  

There’s a whole discussion about what’s “allowed” in the remodeling of a designated landmark building, but let’s not go there at the moment. What should be flagged as this proposal enters the public arena is the effect of converting yet another commercial building into a nonprofit use. In other words, if this project goes forward it will be one more part of Berkeley that’s off the tax rolls, at a time when the city is already struggling with the cost of providing city services as revenues decline.  

Citizen watchdogs have been busy calculating, as the deadline for putting new property taxes on the ballot approaches, how much of the city is non-tax-paying property owned by nonprofits. It’s not that citizens don’t appreciate the good works that many of these nonprofits do, but we have a lot of them here already, and more are in the works. On University Avenue, for example, a liquor store (ugly and unpopular) is slated to be replaced by a synagogue for a new congregation, which from an esthetic perspective is a winning plan, but which will mean a loss of taxable property. Next door a restaurant (not ugly or unpopular) is being supplanted by a private school, well-regarded, but another nonprofit. On the south side of campus, the American Baptist Seminary’s plan to add more offices and rental units to their already substantial untaxed holdings has been derailed for the moment by neighborhood objections, but it will certainly be back in another guise. 

These are only a few of the many newer examples. Berkeley has always been hospitable to religious and educational institutions of all kinds, led by the University of California. But we might now be close to reaching some kind of a tipping point. In 1994, a thorough study by then City Auditor Anna Rabkin reported that 35 percent of Berkeley property was untaxed, for a total estimated annual revenue loss of $23.4 million. Reliable observers now estimate that at least 40 percent is off the tax rolls. 

A recent letter from the Claremont Elmwood Neighborhood Association asked for a concerted and systematic effort to negotiate payments in lieu of taxes (PILOT fees) from the major exempt landholders in Berkeley, as is done in other cities in similar circumstances. It also recommended one-time fees for impacts of new developments on the infrastructure, nonprofit developments included.  

Rabkin’s 1994 study reached similar conclusions. Now, almost ten years later, it’s time to revisit her proposals, and this time the city needs to act on them promptly. Berkeley taxpayers (including renters whose rent goes to pay property taxes) can no longer afford to subsidize city services for almost half of our city.  


Becky O’Malley is executive editor of the Daily Planet.