Alameda Tax Faces Tough Fight

The school district has a $7 million hole, but small business and commercial property owners say a new tax is unfair.

On a fine, spring day in March 2008, supporters of a parcel tax for Alameda’s schools kicked off their campaign by lining Park Street with children in garbage cans — a symbol of the educational opportunities that they felt would otherwise be thrown away. Their campaign to pass the tax, dubbed Measure H, raised little organized opposition until its final weeks, when some property and business owners realized they’d be paying far more than the $120 annual bill homeowners would face.

Two years later, Alameda Unified is again headed to the ballot box, this time to ask for a replacement tax that would generate double the money its existing parcel taxes net each year. And though the garbage cans are long gone, a host of small business and property owners who are still upset about Measure H remain.

Their long-simmering anger is driving plans to fight the new tax, even as some acknowledge Alameda’s schools need the money, and even though passage would offer many of them lower tax bills. “It passed with very few votes last time,” said Ed Hirshberg, a plaintiff in one of two lawsuits to invalidate the tax and an active member of Alamedans for Fair Taxation, a group of businesses and property owners that opposes the tax, which Hirshberg said has more than 200 members. “This year, I don’t think it would stand a chance.”

Almost no one denies that the state’s financial tailspin has been a disaster for schools — a disaster that Alameda Unified has been able to sidestep with the aid of its existing parcel taxes, which generate $7.3 million a year. The taxes have helped pay for teachers and coaches who offer music, athletics, and Advanced Placement classes, plus support staff offering counseling, technology, and other services.

But a series of post-Measure H cuts to state funding — which covers more than three-quarters of Alameda Unified’s budget — will leave the district with an anticipated $7 million hole in the 2010-11 school year. The deficit could grow to $17 million when the district’s existing parcel taxes sunset in three years, district officials have said. So in the summer of 2009, they began exploring options for replacing them.

At the same time, the plaintiff in one of the lawsuits, yacht merchant and landowner John Beery, agreed to help the district set up a community group to determine the structure for the new tax, a move district officials and tax supporters have characterized as an effort to make the tax fairer to small businesses. Although Beery ultimately disagreed with the outcome, the group voted 8-3 to recommend that the district pursue another split-roll tax. On March 15, the Board of Education voted 4-1 to put it on the ballot.

The replacement tax will charge homeowners $659 a year for eight years, more than twice the current amount. If the tax gains the support of two-thirds of voters who submit a mail ballot by June 22, commercial property owners will pay 13 cents per square foot of lot, down from the 15 cents per foot they pay under Measure H, with the same $9,500 cap Measure H has now. Measure H remains in effect while the lawsuits filed against it make their way through the courts. Measure A, the district’s other parcel tax, charges all property owners a flat rate of $189 per parcel. Seniors and disabled people can request exemptions from the tax.

The school district’s move toward a split-roll tax infuriated small business and property owners, who felt they were unfairly singled out by Measure H because they lacked the political power to stop it. According to school district figures, Alameda has more than 16,000 residential parcels on the tax rolls and just 853 commercial properties.

Small business and property owners have complained that the tax places an outsized burden on them, one they can’t afford during a steep recession. For the 2008-09 school year, commercial property owners and businesses paid more than $2.6 million toward the tax, while residents paid just under $2 million.

Donna Layburn, who owns the Alameda Marketplace, said Measure H costs her an additional $7,300 a year because the property she leases — which includes several parking lots — is spread across several parcels. Layburn, like many business owners, operates under a lease that allows her landlord to pass on costs like tax increases to her. Layburn also is now negotiating for another parking lot, and if she’s successful, her Measure H taxes will increase by another $3,000 a year, she said. “I know the schools are hurting and need money,” said Layburn, who said she’s not one of the business owners who are angry about the tax. “It is a lot of money for small businesses like ours.”

Hirshberg and his fellow plaintiffs argued that Measure H is illegal because it is not uniformly applied, though the judge in that case indicated he plans to rule against them when he issues his ruling in April or May. Hirshberg said they declined to participate in the advisory group because they didn’t think it would be successful and to do so would have eliminated their appeal rights, which they plan to exercise.

Hirshberg also said he would have supported the new tax if it were uniform, even if it means he would get a bigger tax bill. He asked the school board to instead consider a uniform square-foot charge for each lot.

But the replacement tax’s proponents said none of the tax structures available to them are fair to everyone. And, politically, they faced a Hobson’s choice. Charging everyone the same amount of money would result in an $809 a year tax, which they said would not be palatable to homeowners and would place almost the entire burden of the tax — 95 percent — on them.

A flat rate also could harm some local businesses that sit on large plots of land, and could create a financial incentive for other major landowners to fight the tax, while also hurting lower-income homeowners because their houses, proponents said, are often on larger lots than their wealthier neighbors. “We couldn’t get the revenue any other way,” said school board Trustee Tracy Jensen, who is also on the committee that is working to pass the tax.

Jensen and others contend the proposed tax is fairer than the current taxes: More than half of Alameda’s commercial property owners or the business owners who rent from them will see their parcel tax costs drop by 25 percent or more, they said. And the replacement tax would lower commercial property owners’ total parcel tax burden by about half.

But Hirshberg and others don’t see it that way. And they have been successful in convincing some onetime supporters not to back the new tax. The Alameda Association of Realtors — which supported Measure H — is not taking an official position on the new tax, said President Rob Platt. “We understand the schools are important,” he said. “However, we’re not comfortable with the structure of the tax.”


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