6 22-0351 Subject: Informational Report On The Provisional Tax Exemption Or Tax Reduction For Certain Owner-Occupied Residential Rental Properties
From: Council President Bas And Councilmember Fife
Recommendation: Approve A Report And Recommendation From The Finance Department On Ordinance No. 13579 C.M.S. Which Provides A Provisional Tax Exemption Or Tax Reduction For Certain Owner-Occupied Residential Rental Properties Under Certain Conditions, Including Information On Outreach And Implementation
I oppose accepting the Finance Department report as the final word on how Mom and Pop rental providers will be taxed. I absolutely support Oakland's passing a progressive business tax - large businesses should pay their fair share and small businesses, including Mom and Pop rental providers, should be given a break. Yes, there will be some reduction in revenue if we reduce the tax rate for Mom and Pops. Just as there is some reduction in revenue when grocers making less than a certain amount per year have their rates reduced. This is made up for by raising the tax rates for large, multimillion dollar businesses. THAT'S WHAT A PROGRESSIVE BUSINESS TAX IS ALL ABOUT! Please carry out the purpose of the progressive business tax for ALL categories of businesses, and don't leave out Mom and Pop rental providers. We provide low cost housing, we are struggling to stay in our homes, many of us are minority property owners and already disadvantaged by societal inequalities. It doesn't take much to see that a rental property provider making less than $150,000 per year from her property shouldn't be asked to pay many time more in taxes than a small grocer making way more than that. That is not progressive. That is not fair. That is not right.
Thank you.
City Council: Please TAKE ACTION NOW to make the Business Tax proposal more Equitable and Progressive!
As written, the current tax proposal is flawed & NOT Equitable - if a grocer and a small housing provider both earn the same amount of yearly income, the housing provider would be 2800% more in taxes!
Mom and Pops are part of the solution to the housing crisis and provide low cost housing. Many Mom and Pops are minority owners who provide housing to fellow minority residents who are not always welcomed everywhere in the city. When you displace local black and brown and immigrant housing providers, you also displace black and brown and immigrant renters. The Business Tax proposal allows for grocers earning up to $1 million to pay at a tax rate of $0.50 tax/$1000 income. The VERY least is to allow Mom and Pops earning a quarter of that or $250k to pay $1.20 tax/$1000 income. At a quarter the earning & 2.5 times higher taxes, it is still hugely NOT equitable but it is something.
Council members, please take concrete steps to show that you can be more equitable to small Mom and Pops and that you support local residents who are helping solve the housing crisis by providing housing. Make the tax more equitable and progressive for Mom and Pops earning $250k or less -- We need to keep as many Mom and Pops as possible! Mom and Pops are being forced to sell. When their housing is taken over by large, outside corporations, residents see higher rents and more displacement.
I am in favor of making the current business license tax be more equitable for small properties (eg. 5 units or less, or gross receipts of less than $200,000 / year) than it is now (at $13.95/ $1,000 gross receipts). Mom and Pop rental properties had as much to lose during covid as any other small business, and made worse by the never-ending Eviction Moratorium when tenants stopped paying rent.
With the four scenarios analyzed in the report are as follows:
1. Owners with 5 or fewer rental units: the rate would change from $13.95 per $1,000 to a new rate of $1.40 per $1,000 in annual gross receipts (Class E rates).
2. Owners with annual gross receipts of $150,000 or less: the rate would change from $13.95 per $1,000 to a new rate of $1.40 per $1,000 in annual gross receipts (Class E rates
3. Owners with 3 rental units or fewer AND annual gross receipts of $150,000 or less: the rate would change from $13.95 per $1,000 to a rate of $1.40 per $1,000 in annual gross receipts (Class E rates).
4. Owners with 5 or fewer rental units: the rate would change from $13.95 per $1,000 to a rate of $1.20 per $1,000 in annual gross receipts (Class N rates).
I encourage the council to show their compassion for mom and pop housing providers who have borne the brunt of covid these past two plus years. They are part of the affordable housing equation with tenants.
Please reduce the business tax rate for Small Rental Property Owners TODAY. Small Rental Property Owners can't wait to see if you will reduce the tax AFTER THE ELECTION. We need to know today if the City Council will include a category for Small Rental Property Owners so that we can support or oppose the measure. Lowering the tax rate is the right thing to do for small rental property owners whose operation costs like maintenance, materials, water, utilities, city fees, property taxes, insurance continue to escalate with very little room to recover costs.
Finally, staff's decision that" no outreach was deemed necessary for this report" is contrary to the purpose of the report where outreach to owner occupied rentals was the subject. Staff missed an opportunity to inform small property owners of potential changes affecting them.
My name is Aria White from Oakland and I am a member of NDH, Neighbors Defending Homes, who have spent over 6 years trying to address the increasingly dire situation of Mom and Pop rental providers. They are currently being charged an excessive and unfair tax rate of $13.95 per $1,000 of gross rental income. This greatly exceeds the rates paid by many other businesses including grocers, manufacturers and retailers. This is obviously not equitable or fair. It is driving Mom & Pop rental providers out of the housing market and exacerbating the lack of affordable housing. The Oakland City Council has acknowledged that the "2019 Exemption Amendment" failed to meet expectations and was only utilized by 68 people who received less than $20,000in refunds over the past few years. This failure was compounded by the lock down of City offices and communications due to the covid-19 pandemic. Now after almost 3 years, you have the opportunity,as well as the ethical obligation to correct some of these inequities. NDH is requesting that any SRPP ( Small Rental Property Providers) with $150,000 or less in annual gross receipts be included within the PBT ( Progressive Business Tax) Ballot Measure.
Thank you for your time and careful consideration.
This tax does not seem to acknowledge the difference(s) between larger property owners and mom and pop SSRP's. Their costs, maintenance, current economic situation already squeezes them and their tenants. This is NOT equitable and likely would cause more overpriced residences in the area further increasing a lack of housing for current owners/renters. This doesn't serve our community and neighborhoods. No!
The Neighbors Defending Our Homes Coalition (NDH) supports an Equitable Progressive Business Tax (PBT). Now is the time to invest in keeping Naturally Occurring Affordable Housing on the rental market!
We understand that the CC intends to amend the current PBT language to include Mom & Pop rental providers. The Finance Staff Report shows the:
1. Small Rental Property Providers earn tiny gross receipts (SRPPs); &
2. Impossible hurdles in the 2019 "Exemption" resulted in only 68 SRPPs qualifying, & less than $20,000 being refunded in 3 years!
NDH strongly urges the CC to include all SRPPs with less than $150,000 in the PBT. This move will prevent the tremendous confusion over what constitutes a “unit” & provide a clear cutoff that will save valuable staff time. Losses in revenue can be made up by the larger corporations, huge landlords, and other big business entities. That’s what a progressive tax is about! Compare with the cost of building low-income rentals!
Hundreds of SRPPs have asked you for relief over the past 6 years. The current PBT language is NOT “EQUITABLE”. It charges SRPPs 28 times the rate of grocers, & 11.6 times the rate of administrative hubs, auto dealers, public utilities, & other businesses with up to $1M gross receipts!
Including SRPPs helps reverse City policies that are: Driving SRPPs from Oakland & lower cost housing off the market, exacerbating displacement, encouraging low-income community gentrification, and increasing homelessness.
I oppose accepting the Finance Department report as the final word on how Mom and Pop rental providers will be taxed. I absolutely support Oakland's passing a progressive business tax - large businesses should pay their fair share and small businesses, including Mom and Pop rental providers, should be given a break. Yes, there will be some reduction in revenue if we reduce the tax rate for Mom and Pops. Just as there is some reduction in revenue when grocers making less than a certain amount per year have their rates reduced. This is made up for by raising the tax rates for large, multimillion dollar businesses. THAT'S WHAT A PROGRESSIVE BUSINESS TAX IS ALL ABOUT! Please carry out the purpose of the progressive business tax for ALL categories of businesses, and don't leave out Mom and Pop rental providers. We provide low cost housing, we are struggling to stay in our homes, many of us are minority property owners and already disadvantaged by societal inequalities. It doesn't take much to see that a rental property provider making less than $150,000 per year from her property shouldn't be asked to pay many time more in taxes than a small grocer making way more than that. That is not progressive. That is not fair. That is not right.
Thank you.
City Council: Please TAKE ACTION NOW to make the Business Tax proposal more Equitable and Progressive!
As written, the current tax proposal is flawed & NOT Equitable - if a grocer and a small housing provider both earn the same amount of yearly income, the housing provider would be 2800% more in taxes!
Mom and Pops are part of the solution to the housing crisis and provide low cost housing. Many Mom and Pops are minority owners who provide housing to fellow minority residents who are not always welcomed everywhere in the city. When you displace local black and brown and immigrant housing providers, you also displace black and brown and immigrant renters. The Business Tax proposal allows for grocers earning up to $1 million to pay at a tax rate of $0.50 tax/$1000 income. The VERY least is to allow Mom and Pops earning a quarter of that or $250k to pay $1.20 tax/$1000 income. At a quarter the earning & 2.5 times higher taxes, it is still hugely NOT equitable but it is something.
Council members, please take concrete steps to show that you can be more equitable to small Mom and Pops and that you support local residents who are helping solve the housing crisis by providing housing. Make the tax more equitable and progressive for Mom and Pops earning $250k or less -- We need to keep as many Mom and Pops as possible! Mom and Pops are being forced to sell. When their housing is taken over by large, outside corporations, residents see higher rents and more displacement.
I am in favor of making the current business license tax be more equitable for small properties (eg. 5 units or less, or gross receipts of less than $200,000 / year) than it is now (at $13.95/ $1,000 gross receipts). Mom and Pop rental properties had as much to lose during covid as any other small business, and made worse by the never-ending Eviction Moratorium when tenants stopped paying rent.
With the four scenarios analyzed in the report are as follows:
1. Owners with 5 or fewer rental units: the rate would change from $13.95 per $1,000 to a new rate of $1.40 per $1,000 in annual gross receipts (Class E rates).
2. Owners with annual gross receipts of $150,000 or less: the rate would change from $13.95 per $1,000 to a new rate of $1.40 per $1,000 in annual gross receipts (Class E rates
3. Owners with 3 rental units or fewer AND annual gross receipts of $150,000 or less: the rate would change from $13.95 per $1,000 to a rate of $1.40 per $1,000 in annual gross receipts (Class E rates).
4. Owners with 5 or fewer rental units: the rate would change from $13.95 per $1,000 to a rate of $1.20 per $1,000 in annual gross receipts (Class N rates).
I encourage the council to show their compassion for mom and pop housing providers who have borne the brunt of covid these past two plus years. They are part of the affordable housing equation with tenants.
Please reduce the business tax rate for Small Rental Property Owners TODAY. Small Rental Property Owners can't wait to see if you will reduce the tax AFTER THE ELECTION. We need to know today if the City Council will include a category for Small Rental Property Owners so that we can support or oppose the measure. Lowering the tax rate is the right thing to do for small rental property owners whose operation costs like maintenance, materials, water, utilities, city fees, property taxes, insurance continue to escalate with very little room to recover costs.
Finally, staff's decision that" no outreach was deemed necessary for this report" is contrary to the purpose of the report where outreach to owner occupied rentals was the subject. Staff missed an opportunity to inform small property owners of potential changes affecting them.
I am in agreement with the comments made by The Neighbors Defending Our Homes Coalition (NDH).
My name is Aria White from Oakland and I am a member of NDH, Neighbors Defending Homes, who have spent over 6 years trying to address the increasingly dire situation of Mom and Pop rental providers. They are currently being charged an excessive and unfair tax rate of $13.95 per $1,000 of gross rental income. This greatly exceeds the rates paid by many other businesses including grocers, manufacturers and retailers. This is obviously not equitable or fair. It is driving Mom & Pop rental providers out of the housing market and exacerbating the lack of affordable housing. The Oakland City Council has acknowledged that the "2019 Exemption Amendment" failed to meet expectations and was only utilized by 68 people who received less than $20,000in refunds over the past few years. This failure was compounded by the lock down of City offices and communications due to the covid-19 pandemic. Now after almost 3 years, you have the opportunity,as well as the ethical obligation to correct some of these inequities. NDH is requesting that any SRPP ( Small Rental Property Providers) with $150,000 or less in annual gross receipts be included within the PBT ( Progressive Business Tax) Ballot Measure.
Thank you for your time and careful consideration.
This tax does not seem to acknowledge the difference(s) between larger property owners and mom and pop SSRP's. Their costs, maintenance, current economic situation already squeezes them and their tenants. This is NOT equitable and likely would cause more overpriced residences in the area further increasing a lack of housing for current owners/renters. This doesn't serve our community and neighborhoods. No!
The Neighbors Defending Our Homes Coalition (NDH) supports an Equitable Progressive Business Tax (PBT). Now is the time to invest in keeping Naturally Occurring Affordable Housing on the rental market!
We understand that the CC intends to amend the current PBT language to include Mom & Pop rental providers. The Finance Staff Report shows the:
1. Small Rental Property Providers earn tiny gross receipts (SRPPs); &
2. Impossible hurdles in the 2019 "Exemption" resulted in only 68 SRPPs qualifying, & less than $20,000 being refunded in 3 years!
NDH strongly urges the CC to include all SRPPs with less than $150,000 in the PBT. This move will prevent the tremendous confusion over what constitutes a “unit” & provide a clear cutoff that will save valuable staff time. Losses in revenue can be made up by the larger corporations, huge landlords, and other big business entities. That’s what a progressive tax is about! Compare with the cost of building low-income rentals!
Hundreds of SRPPs have asked you for relief over the past 6 years. The current PBT language is NOT “EQUITABLE”. It charges SRPPs 28 times the rate of grocers, & 11.6 times the rate of administrative hubs, auto dealers, public utilities, & other businesses with up to $1M gross receipts!
Including SRPPs helps reverse City policies that are: Driving SRPPs from Oakland & lower cost housing off the market, exacerbating displacement, encouraging low-income community gentrification, and increasing homelessness.