A formal demand by city officials that UC Berkeley adhere to its parking tax appears likely to send a second town-gown dispute to the courtroom.
In a March 4 letter to UC Berkeley parking head Nad Permaul, the city gave the university 30 days to begin collecting the tax and held that it owed the city three years of back tax revenue.
“If they don’t pay, we’re going to take them to court,” said Mayor Tom Bates.
But UC Counsel Stephen Morrell said that the university system had no intention of paying local parking taxes. “Even if the tax is permissible there is no legal way to make the university collect the tax for the city,” he said.
The city estimates the tax would generate $600,000 a year from taxes on the university’s approximately 7,000 parking spaces.
The demand for parking revenue is part of a full-court press by the city to squeeze more money from the university to compensate for services the city provides. As a state institution UC Berkeley is exempt from direct city taxes and assessments. Yet, with the city projecting budget shortfalls for the next four years, it has recently taken a more aggressive posture with the university.
In February, the city sued the university over its long range growth plan after negotiations broke down over university payments to the city. Later this month, city officials have said they will begin billing UC Berkeley for sewer service and will file suit if the university doesn’t pay.
“We believe this is simply part of an ongoing political strategy by the mayor,” said Janet Gilmore, UC Berkeley spokesperson. In negotiations, Gilmore said, the university had offered to increase its annual payments to the city to $1.2 million. Berkeley is asking for between $1.4 and $2.1 million for sewers alone.
Currently the city levies a ten percent tax on parking spaces that private parking operators collect and remit to the city.
Berkeley officials argue that UC’s tax exemption doesn’t apply to the parking tax, because the tax is levied on parking lot users, not the university. “We believe it’s a proper approach to collecting taxes that all other parkers pay,” Chakos said.
Any lawsuit would be pursued by city attorneys, she said. The statute of limitations prevents the city from demanding parking tax revenues from beyond three years.
UC’s Morrell said that collecting the tax would place a costly burden on university operations. “We believe that although nominally it is a tax on users for parking, in reality it’s a tax on the university and the university is exempt from taxes,” he said.
If Berkeley is successful other UC towns appear likely to follow the city’s lead. “If Berkeley can do it, we’ll do it in a second,” said Santa Cruz Mayor Mike Rotkin, whose city has also battled its campus over growth and money.
Santa Cruz City Attorney John Barisone said that although his city hasn’t clashed with UC over parking taxes, he agreed with the city’s position. Several years ago, he added, UC rebuffed Santa Cruz’ demand that it collect a city tax on admissions to cultural events at the campus.
“The general counsel at that time basically told us that he disagreed with my analysis and said we would have to sue them. At the time, the City Council didn’t want to litigate,” Barisone said.
According to Chakos, although no UC campus pays city parking taxes, schools in other states do, including the University of Wisconsin, the University of South Dakota and the State University of New York.