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Report Puts ‘Escaped’ Tax At $267,957

Friday November 07, 2003

Berkeley failed to bill more than $250,000 for what city staff calls “escaped” property tax assessments over the past four years on seven city developments, according to a report given City Council this week by Acting City Manager Phil Kamlarz. 

The report followed a citizen complaint and a later Daily Planet article reporting that at least two buildings put up and managed by prominent Berkeley developer Patrick Kennedy had escaped Berkeley fee and assessment billings for several years. 

Kamlarz’s report didn’t indicate when owners would be billed for the unassessed taxes. 

Four of the properties—the Gaia Building on Allston Way, the Berkeleyan on Oxford Street, Acton Courtyard on Acton Way, and the Artech Building on Milvia Street—were developed by Kennedy’s Berkeley-based Panoramic Interests. 

Kamlarz wrote that a staff investigation had revealed that Kennedy’s companies were underbilled a net total of $163,317 for the four properties since the 2000-2001 fiscal year, including more than $72,000 for the Gaia Building and more than $68,000 for the Berkeleyan. 

Staff also reported that the city had overbilled Kennedy’s company nearly $6,000 on the Artech Building, an amount factored into the developer’s $163,000 bill. 

“Mr. Kennedy and staff have met and reached agreement on the square feet to be taxed for each property, the dollar amounts calculated related to each, and the total amount due by property,” Kamlarz wrote. 

The other three properties on the “escaped assessments” list included Oak Court Apartments on Allston Way, developed by Berkeley developer Avi Nevo ($39,521 in unbilled assessments over the past two years), the Renaissance Apartments on University Avenue ($45,859 in unbilled assessments over the past four years), and the Bank of America Building on Shattuck Avenue near Andronico’s ($19,260 in unbilled assessments over the past three years). 

The Daily Planet told Budget Manager Paul Navazio about the Bank of America building’s possible status as an unbilled property two weeks ago. 

Kamlarz said that the Gaia, Oak Court, and Acton Courtyard buildings have not yet received final Certificates of Occupancy from the city. 

Last month, the city manager’s office, over the signature of retiring City Manager Weldon Rucker, issued a memo to the mayor and City Council indicating that city staff was currently holding off billing property fees and taxes while a building was operating under a Temporary Certificate of Occupancy (TCO). 

The October Rucker memo indicated that this policy was now being changed by city staff to bill such properties even before a final certificate was issued. 

According to the Kamlarz report, the Berkeleyan escaped assessments because its permanent Certificate of Occupancy, issued in 2000, “was not correctly entered into the system,” the Bank of America Building was overlooked “due to a staff data entry error,” and the Renaissance Apartment Building was improperly listed as residential, rather than mixed use. Kalmarz said that the Artech Building was improperly listed at the higher rate of commercial rather than mixed use, resulting in the overbilling to Kennedy. 

Kamlarz also listed three properties—a light industrial building at 1101 Eighth Street, a mixed-use commercial-apartment space at 2508 Channing Way, and the Redwood Gardens Senior Citizens apartments on Derby Street—where “significant amounts of either billable or lost revenue” may be discovered. 

A check of the Alameda County property assessment rolls shows that neither of these three properties paid Berkeley fees and assessments for the current tax year. Kalmarz said that there is an additional 121,000 square feet of small new construction, primarily single-family home additions, on which the city may be able to assess unbilled taxes. 

The Kalmarz memo said that city staff would “continue working on improving the various work processes and automated systems” of the city’s tax billings, and would report its progress back to Council “at regular intervals beginning in January 2004.”