Oakley voters will not only decide on Nov. 4 who should comprise a majority of the City Council; they'll also determine whether most of the businesses in the city should pay higher taxes.
Measure L has the backing of all five City Council members, who point out in a ballot argument that Oakley needs more revenue because the city only receives a little more than a fifth of what other cities in the county receive per capita from their business license tax.
A ballot argument opposing Measure L was not submitted. But a business group called the East County Coalition has launched an L-No! campaign that argues that the tax unfairly targets landlords and that this is the wrong economic time to be raising taxes.
If approved by a majority of voters, the way the city assesses taxes on business will change. Instead of being based on a flat fee plus $10 for each employee in a business, the tax will be based on the business's gross receipts. The other major change is that previously exempted landlords and farmers will now be paying the business tax.
A Measure L statement on the city's Web site reads, The change may lower the tax paid by some smaller businesses and raise the tax paid by others, especially larger businesses.
While not expected to result in significant new revenues in the near future, the changes proposed are expected to bring the City's tax structure closer to those of our neighboring cities, and ultimately bring the City's business license tax revenues more in line with local averages.
Equally important, as Oakley grows and larger businesses are established here, the City's business license tax revenues would be expected to grow more under the amended structure than the current one.
The increased revenue will go into the city's General Fund to be used for services such as police protection, senior and youth programs, street repairs, park maintenance, library programs and code enforcement.
The council's ballot argument states, While part of why Oakley's revenues are lower is that we have fewer businesses, part is because our rates are lower (especially on larger businesses). In fact, Oakley's current rates are among the lowest in the State.
While rates in Oakley and our neighboring cities are generally lower than in other areas of the County, Measure L brings Oakley's business license tax rates into closer alignment with East County rates overall, while remaining competitive for small and medium size businesses.
Aaron Meadows, the treasurer and leader of the East County Coalition, is also a real estate broker who has plastered the environs of his Coldwell Banker office on Del Antico Way at Main Street with signs reading L-No! Stop the Tax Increase. He said the tax hike is not fair, particularly for landlords who would now be paying $200 per rental unit per year.
His coalition has raised $8,500 so far to get the word out that the tax will hurt existing businesses in Oakley and discourage new businesses from locating here.
We have a lack of businesses in Oakley, said Meadows. I don't have an issue with having higher per capita income from business license taxes, but we must do it by getting additional businesses in Oakley, not by taxing the ones that are here more. They really hit rental housing hard.
Meadows pointed out that if his real estate company generates $1 million in revenue, the city's tax would be $125. But if a landlord generates $1 million by renting out 40 houses at $2,000 per month, the city's tax would be $8,000.
Eight thousand versus $125 is that equitable? asked Meadows. Who's going to pay that $8,000? Is it not going to be passed on to the renters? I would have to pass it on to my renters.
The $200 tax would be on top of the $135 rental inspection fee the city is already charging landlords per unit, he said. In addition, the business tax will increase with inflation.
The new tax may encourage more low-income housing in the city, said Meadows, because landlords will receive a 50-percent discount on the tax if they own a low-income rental. Meadows said this could lead to more Section 8 subsidized housing in Oakley.
Oakley Finance Director Paul Abelson stated in a press release that the discount would go only to landlords signing long-term agreements that restrict their rental property to affordable housing.
Because these covenants/restrictions would reduce the future sales price and value of the home, it is very unlikely any landlord renting through Section 8 would place such a covenant on his/her properties, Abelson's press release states. The Measure would have those landlords finally pay a tax.
In the end, while the Measure's opponents want this to be about a crisis, it is not. It is about changing the City's business license tax structure so that it will work better in the future, and to bring the City's tax structure closer to that of neighboring cities.
But Meadows questioned whether this is the best time to raise taxes, noting that a million-dollar home in his neighborhood recently went into foreclosure.
I just don't think it's the right time to be paying something like this, he said. There's going to be a certain group of people that will be affected. It could lead to more low-income housing in this community because of the way they wrote the measure. I think the whole thing was rushed through.
For more information, go to www.ci.oakley.ca.us/index.cfm