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Alameda Business Alliance: The tough road to consensus

Submitted by on 1, October 8, 2010 – 5:00 am4 Comments

By Jeff Cambra

In the initial announcement of the Alameda Business Alliance, I posed three questions. The first was, “Who are the stakeholders?” Since the ABA views the school system as a community asset akin to public safety services, parks, and great shopping districts, the many interest groups affected by the state of the district are all stakeholders and must be included in the community solution. For the immediate task at hand, the stakeholder group with the widest variation in interests are the several constituencies that make up the business community. A quick survey of these various interests is enough to make one’s head spin. How does a single parcel tax structure equitably assess a large piece of undeveloped land like the one along Tilden Way, a small business on Webster Street, a very large parcel that is home to a family-run business, and a 50-unit apartment building?

This is the challenge the ABA faces and is attempting to resolve. So, how do you bring these many and varied interests together? You identify the common beliefs among the interests and build a set of unifying principles to guide the discussion. The following draft principles represent a first attempt to define the common beliefs held by the participants of the ABA. They do not represent the views of the entire business community. They are presented for public comment. These principles only address the possible structure for the commercial component. They do not apply to residential parcels and they do not define a tax rate. The tax rate will be discussed later this month.

1. This initial draft is based on the premise that the tax should be based on square footage of land. Generally speaking, commercial parcels vary greatly in size ranging from small converted houses to very large parcels like the marinas. A flat tax that applied equally to all size parcels could result in higher assessments to smaller parcels. Additionally, there is roughly four times more square footage of land as there is in improvement square footage. So, the theory is that a smaller charge per square foot rate and a smaller total tax bill would be the result.

2. The current state law that authorizes parcel taxes does not allow a tax rate that is based on the value or worth of the land or the type of income producing activity that takes place on the parcel. Indeed, the notion that the larger the parcel, the more likely the business can afford to pay a larger tax, causes concern for the ABA. The Tilden Way lot produces no income and the large vacant office complexes may be currently losing money given the current high vacancy rate.

3. No one parcel should bear a disproportionate portion of the business community’s share of the tax and that parcel should not bear a disproportionate share of the entire community contribution. Here, the discussion is centered on shared contribution to a community asset with consideration that such a contribution would not cause a severe hardship on a business regardless of the size of the parcel.

The ABA welcomes comments from the community and any suggested alternatives. The deadline for receiving comments is Friday, October 15. Based on the community responses, the ABA will attempt to adopt a set of parcel tax structure principles that will be used to evaluate a number of possible specific tax rates.

Please comment below or you may send a private comment to Island editor Michele Ellson at michele@theislandofalameda.com. All comments will be presented at the next ABA meeting.

4 Comments »

  • Alamama says:

    Jeff,

    Back on September 17, I posted a comment in response to your previous entry that expressed concerns about the process that you were engaging in. I am sorry to see that some of those concerns now appear to be coming to fruition.

    Specifically, you say above that “These principles only address the possible structure for the commercial component. They do not apply to residential parcels and they do not define a tax rate.” This is exactly the problem that I foresaw. Looking at the commercial component in a vacuum is not going to help our community reach a consensus. In order to do that, all the stakeholders need to be involved in the process.

    What came through loud and clear during the Measure E campaign was that many, many community members (most notably commercial property owners) objected to any tax structure that taxed commercial property owners and residents at different rates. The subtext of your post above, however, indicates that the ABA is now, in fact, demanding that differing rates continue to apply to commercial and residential property owners — only this time, the ABA expects to pay less than residential property owners. I just don’t think that a proposal that favors commercial property owners over residential owners will fly with the electorate — which is, by definition, the residents of Alameda.

    Whatever structure the tax takes, we as a community have to be pragmatic. We have to structure the new tax in a manner that will optimize the likelihood that the tax will meet with the approval of 2/3 of the voters. I have a very hard time believing that the ABA’s proposal, which seems to favor commercial properties by placing a heavier relative burden on residential properties, will meet with the approval of 2/3 of Alameda voters (who are more likely to be residential owners that commercial property owners). So please, ABA, take into consideration whether your proposal will pass at the ballot box.

    To me, the tax with the greatest likelihood of passing will be one that taxes both commercial and residential owners at the same rate. Who could possibly argue that such a tax is not “fair”? Will ABA support a tax that taxes commercial properties at the same rate as residential properties? If not, your approach would be, at best, unproductive. As worst, it will be harmful to our ability to pass a parcel tax.

    As to ABA’s theory that a parcel tax based on parcel square footage will result in a lower overall tax than one based on residential square footage, that theory is completely illogical. What is likely going to happen is that the community will set a revenue goal for the tax and then the rate will be set based on that revenue goal, whether it is done by parcel square feet or building square feet. Of course because there are more parcels square feet than building square feet, the rate on a parcel will be lower, but the total tax might not be. For some properties, the rate will be higher if it’s based on parcel square footage than if it’s based on building square footage. Moreover, ABA seems to be blind to the likelihood that the closest correlation between property value and square footage is likely building square footage, not parcel square footage. Building square footage is more likely to equate with property value because improvements likely equate with productive use of the property. Moreover, how does the ABA propose to explain why small home owners on huge lots in the West End should pay more than large home owners on small lots in Bayport?

    Again, as I said in my earlier comment, the ABA cannot credibly have a voice in this debate unless it is willing to participate in discussions that take all stakeholders into account. The ABA will not be taken seriously by the voters of Alameda unless they are willing to work toward a proposal addressing all properties, including residential properties. Moreover, if they truly believe that their proposal is going to be a fair resolution for our entire community, then they need to publicly stand by their position. The secrecy of the organization undermines any credibility they might otherwise have.

    In short, with this latest report, the ABA has taken a huge step backwards. The ABA must become involved in a community conversation about what is in the best interest of our entire community — not just what they think is in their own best interest.

  • jc says:

    Good day Alamama:

    I did not check the site over the weekend. So, I just realized you made a comment. It will take me a bit of time to properly respond to all your concerns. Please give me a few days to develop a proper reply. Also, thank you for taking the time to provide these comments. They are greatly appreciated.

    Sincerely,

    Jeff Cambra, Mediator

  • Publius says:

    Does the ABA have a firm grip on its numbers? Its counterpart org Alamedans for free taxation keeps posting innaccurate numbers re: sq. footage of land and mistaken policies re: possessory interest. It would be reassuring to know that ABA is at least grounded in reality.

  • Robb Ratto says:

    Just to set the record straight, yet again. The Park Street Business Association (PSBA) is not in any way affiliated with the Alameda Business Alliance. Mr. Cambra does not in any way speak on behalf of the organization I represent nor has he stated or implied that he does. However, I have asked in another post on this site for Mr. Cambra to identify the members of the “Alliance” so that everyone will know exactly who the ABA represents.

    PSBA has met with representatives of the School District and we’ve discussed the parcel tax issue with them. We hope to work with them in order to sculpt a parcel tax that 90% of the electorate will approve. We believe this is the best way for PSBA to proceed on this issue.

    Robb Ratto
    Executive Director
    Park Street Business Association

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