Panoramic Sales Net City $2.1 Million

By Richard Brenneman
Friday April 20, 2007

The sale of seven Berkeley apartment buildings will make the city richer by $2.1 million in the form of a one-time property transfer tax payment, reports Calvin Fong, an aide to Mayor Tom Bates. 

The fee, assessed at the rate of 1.5 percent of the sale price, indicates that the seven apartments owned by Panoramic Interests sold for about $150 million. 

The addition of more than $2 million to the budget of a cash-strapped city represents a major windfall at a time when the city has been struggling for funds and scheduling periodic days off for city workers. 

“I’m not sure what the final amount is, but whatever it turns out to be, we could spend it five times over,” said City Manager Phil Kamlarz. 

City councilmembers adopted a policy two years ago of treating major transfer tax receipts as one-time payments for use on capital projects, Kamlarz said. 

“We’ve got a laundry list five miles long,” he said. “It could be streets, or storm drains or housing. Everyone’s got ideas.”  

The seven buildings built by developer Patrick Kennedy, a Piedmont resident, and UC Berkeley Professor David Teece, include the Gaia, Fine Arts, ARTech, Bachenheimer and Touriel buildings as well as the Berkeleyan Apartments and Acton Courtyard. 

The buildings, which consist primarily of smaller apartments rented by UC Berkeley students, represent the largest group of rentals under private ownership in the city. 

The properties were acquired by Equity Residential, a Chicago-based firm that represents itself as “the largest publicly traded owner and operator of multifamily properties in the United States.” 

While Panoramic’s 368 Berkeley units represent a significant percentage of the city’s newer rentals, the figure pales in comparison to the Equity Residential’s February figures for other California rentals—26,241 apartments—and its national total of 165,716. 

In addition to the one-time transfer tax windfall, the city also stands to gain from its share of increased property taxes when the apartment buildings are reassessed based on their new sales price. 

The pre-sale values assigned by the Alameda County assessor’s office total $67.8 million, with the individual values for the buildings set at: 

• The Gaia Building (2001), 2117 Allston Way, $13,496,483; 

• The Fine Arts Building (2004), 2110 Haste St. at Shattuck Avenue, $18,102,621; 

• The Bachenheimer Building (2004), 2119 University Ave., $7,645,446; 

• Berkeleyan Apartments (1998), 1910 Oxford St., $6,376,190; 

• Acton Courtyard (2003), 1370 University Ave., $11,095,554; 

• The Touriel Building (2004), 2004 University Ave., $6,075,994, and 

• The ARTech Building (2002), 2002 Addison St., $5,000,210. 

The assessed values and the actual property values differ significantly because assessments are capped at a maximum annual increase of 2 percent, thanks to the passage of Proposition 13 in 1978. 

Thus, the values of the Panoramic properties don’t reflect the recent strong inflation in real estate, which has only begun to level off in recent months. 

Kamlarz said that the bonanza from a major commercial sale is partly offset by the recent decline in turnover of residential properties.