Unlike neighboring East Bay cities, Emeryville is not a charter city, meaning its government is subject to state law and not a locally drafted charter approved by voters. For Emeryville — a city with a population of just over 10,000 — one of the biggest drawbacks of not being a charter city, like Oakland and Berkeley, is that it cannot impose a real estate transfer tax.
That means that when investors, developers, or property owners buy real estate in Emeryville, the city does not reap the same kind of tax benefits that other Bay Area cities receive. And considering the number of large commercial real estate deals in recent years in Emeryville, the city has lost out on millions of dollars in revenues — money it could have used for much-needed city services.
Emeryville's elected officials are hoping to address this problem in next week's election through two ballot measures: Measure U, which would transform the city into a charter city, and Measure V, which would establish a "real property transfer tax." (Measure V becomes invalid if Measure U fails to pass). The Emeryville City Council unanimously voted to put the measures on the ballot, with the hopes of collecting new revenue that could go toward fire and 911 services, street and park maintenance, and bike, pedestrian, and affordable housing projects.
While the backers of the measure emphasize that this is a commonsense proposal to allow the city to establish a new funding stream for municipal services, the council has come up against a well-financed opposition campaign backed by real estate groups outside of Emeryville.
The National Association of Realtors has spent at least $60,000 against the measure and is the sole funder of the so-called "Citizens to Preserve Emeryville" committee leading the opposition. That committee — which is headquartered in Sacramento, according to campaign disclosures — has saturated Emeryville voters with mailers warning of "unintended consequences" of Measures U and V that "will change life in Emeryville forever."
While $60,000 in campaign spending may not seem like a lot, it's a huge amount in Emeryville — roughly $20,000 more than all the current council candidates have raised combined, according to Mayor Jac Asher, who is leading the push to pass the measures. "We have to provide police services. We have to provide for the sewers and the sidewalks," she said. "It makes sense for us — especially when a lot of large commercial properties turn over every five years — to capture this tax."
Under the current system, Emeryville collects only $0.55 for every $1,000 of worth of real estate sold in the city. If Measures U and V pass, Emeryville would start collecting $12 for every $1,000. In recent years, seven major commercial property sales in Emeryville brought the city a total of $282,000 in tax revenues under the 55-cent rate, according to data Asher provided. If the transfer tax had been in place, those deals would have yielded a total of $6,150,150 for the city.
The proposed $12 transfer tax rate for Emeryville matches the existing rate in the City of Alameda and is lower than the $15 rate in Berkeley and Oakland.
Asher decided to push for this new revenue stream after 2011, when California eliminated redevelopment, which had funneled economic development dollars into cities across the state. As a result, Emeryville lost about $30 million — roughly half of the city's annual budget. "I'm looking forward not just two years, but in five years and in ten years," said Asher. "What are we going to do without these funds?"
Opponents have argued that the measures would constitute a "money grab by the city" and that the tax would make Emeryville less affordable for new homebuyers.
Asher said the claims about affordability in the city are absurd given that the transfer tax would provide funding that could then go toward affordable housing. "We want to build affordable housing. Without these dollars, it's going to take a long time. And the need is urgent right now."
Opposition mailers also note that the change to a charter city would allow city councilmembers to propose controversial charter amendments in the future, like salary increases for their positions. But Asher emphasized that all future amendments would have to go before voters and that the council crafted a very narrow proposal through these measures — such that the only actual change to Emeryville government, if voters approve Measures U and V, would be its ability to collect the transfer tax. "They are really trying to prey on people's fears," she said.
Nora Davis, who has been a councilmember for nearly three decades, said she was hopeful that residents would see past the misleading messages from the opposition. "It's like Big Soda," she said. "But I have a lot of faith in the voters of the city of Emeryville."
Jason Crouch, an Emeryville-based realtor (who lives in Vallejo), argued that there are no guarantees of how the new funding would be spent and that councilmembers' promises about parks and affordable housing may not materialize.
Crouch, who co-signed the official opposition to both measures, also argued that homeowners often decide to sell their properties when faced with financial hardship — after losing a job or going through a divorce, for example — and that this tax would unfairly strain them.
"When the people who administer the government of our city get more money, they just spend it," said Mark Zimmerman, an Emeryville resident and semi-retired realtor, who also signed the formal opposition arguments. "And they have a record of spending it badly."