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Island Talkback: Jeff Cambra on inching toward consensus

Submitted by on 1, November 4, 2010 – 12:03 amNo Comment

By Jeff Cambra

Before I begin this Mediator’s Report #2, I want to acknowledge my friend Robb Ratto, the Executive Director of Park Street Business Association and confirm that the PSBA is not a part of the Alameda Business Alliance (ABA) and that the organization has not participated in any meetings of the ABA.

Now, to the report.

Last month, the ABA released its draft principles for the preferred structure of the next parcel tax to the community. Additionally, the principles and a survey were sent to five business associations and several groups of property owners. After receiving input from the community and the results of the survey, the ABA met again to evaluate the responses and attempt to select one parcel tax structure that the group could support.

I am pleased to announce that the ABA reached a consensus and agreed that a parcel tax structure based on building square footage with a single tax rate that would apply to both commercial and residential buildings would distribute the obligation equitably between business and residential parcels. While a specific tax rate was not discussed, it was clear that the businesses occupying very large buildings would receive huge tax bills under this structure without any consideration of the impact on the business contained in the building.

In reviewing its parcel tax structure principles, the ABA believed that no one business parcel should bear a disproportionate share of the entire business community’s portion of the tax. So, while the ABA felt that the parcel tax assessed should be based on the buildings square footage in a progressive method, it also recognized that the impact of the tax on the businesses within these larger buildings could be radically different from the businesses located in the smaller buildings.

It is this disparity in impact that required the ABA to distinguish between “fair” and “equitable.” While it may seem “fair” to apply one tax rate to all buildings regardless of size, if the resulting tax bill has a much greater impact on the large business, one must ask why should a large building suffer a greater hardship? The presumption that the larger the building the more likely the owner is able to pay is not supported by the large number of exceptions that are present in our community.

The ABA believes it is more equitable to have a parcel tax structure that tries to mitigate the greater impact the parcel tax would have on businesses that reside in large buildings. Therefore, the ABA recommends that the total parcel tax on larger buildings be limited to a specific maximum amount. This limitation could be structured as a uniform tax rate applied to the first “X” number of building square feet rather than a simple cap. This single tax structure would then be uniformly applied to all parcels, both residential and commercial.

With the basic parameters of the parcel tax structure defined, the group can now move to the next step and discuss what tax rate is manageable. In order to assess the impact of various tax rates on small, medium, and large businesses, the ABA must rely on the Alameda Unified School District (AUSD) to have their consultants run the numbers on various scenarios. All these scenarios assume that the same tax rate will be applied to both residential and commercial buildings as currently identified by the AUSD. The AUSD has not released the total amount of money it will seek. Consequently, the scenarios asked for below are designed to set up a grid of lower to upper limit numbers so that the impact of a particular rate can be assessed. The request is to provide the building per square foot rate for the following scenarios:

Total Amount Generated                     Tax Limit per parcel

$10 Million                                                $5,000

$10 Million                                                $7,000

$10 Million                                                $9,000

$12 Million                                                $5,000

$12 Million                                                $7,000

$12 Million                                                $9,000

$14 Million                                                $5,000

$14 Million                                                $7,000

$14 Million                                                $9,000

Earlier this year, the ABA informally asked the AUSD for what the parcel (dirt) square foot charge would be if all the residential and commercial parcels were assessed the same rate and a $7,000 cap was used.  To date, it has not received this information. The ABA is now formally asking what the per square foot charge of parcel (dirt) would be for the following scenarios assuming all residential, commercial, and vacant property was assessed:

Total Amount Generated                     Tax Limit per parcel

$10 Million                                                $7,000

$12 Million                                                $7,000

$14 Million                                                $7,000

This information is requested to confirm that a parcel tax based on square footage of parcel (dirt) would not more equitably distribute the impact of the tax on both commercial and residential parcels. The above request was transmitted to the Superintendent and the five members of the Board on November 3, 2010.

At this point, it is important to note that the ABA has stated that it supports a parcel tax as one of multiple solutions to the funding crisis, and that the tax rate should consider the commercial building owners and business owners ability to pay without causing severe economic hardship. The final tax rate the ABA will recommend will not be determined in a vacuum. The final number will consider the other non-business stakeholders involved in the community discussion, including the AUSD itself. In fact, the ABA will be meeting with representatives from other stakeholder groups over the next two weeks in order to consider their positions before recommending a specific structure and tax rate.

Of course, all of these future discussions and the remainder of the consensus building effort depend on when the AUSD can provide the numbers necessary to allow the stakeholders to work through the process and arrive at a parcel tax structure and rate that the majority of the community, both commercial and residential can support.

Your comments are welcomed and encouraged. Please send to jeffcambra@earthlink.net.

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