Public Comment

Berkeleyside is reporting on an idea put forward by Jesse Arreguin to impose a fee on vacant retail store fronts. They write:

"Arreguin thinks that Berkeley could minimize the number of vacant storefronts by charging landlords a fee when buildings lie fallow for an extended period of time. He will ask the City Council tonight to send a directive to the city manager’s office to study the issue."

As Arreguin seems to know, a simple "vacancy tax" would be illegal under California law. Municipalities may impose fees only for the actual cost of services or facilities provided by the City specifically to that property owner on account of the vacancy. The idea of a straightforward penalty for not renting out a vacant spot has been dreamed of time and again in many cities, and it always stalls on this basic point. Vacancy is a "by right" use which municipalities are prohibited from penalizing. 

Penalties for actual blight, which is not the same thing as a well maintained vacant space, are fine. Penalties because of higher numbers of service calls are fine. Penalties simply for being vacant aren't. 

That's presumably why Arreguin is suggesting a "vacancy registration fee" - a model that has been used in other states with laws similar to California's. In theory, it could work something like this (details may vary but this is the gist): 

The city makes a finding that, in general, vacant storefronts are more likely than others to accumulate code violations (such as graffiti, weeds, broken windows) and higher numbers of service calls to the police, etc. The City has an interest in addressing the code violations that pertain to actual blight and in recovering the costs of service calls necessitated by the vacancy. 

Therefore, the city establishes a policy to step up code enforcement on those properties with more frequent inspections and so forth. 

For that purpose, the city must maintain a list of such properties and use more staff hours to inspect and enforce. 

The fee can nominally cover those extra expenses. For example, if once a month an inspector comes around and writes up violations for graffiti and such, the fee can cover the cost of those inspections and the staff time needed to process the citation. If there are legitimate service calls that can reasonably be attributed to the vacancy, the City can use fees to recover those costs. 

One reason that this end around might run into legal problems is that the city's finding that the vacant properties are a greater source of code violations and service calls must be supported by facts. Otherwise, property owners could argue in court that the City is fibbing and trying to impose an unlawful vacancy penalty -- in effect a shakedown by the city to pay for unnecessary staff hours. 

Another legal problem is that the fees charged must actually reasonably correspond to the expenses the City incurs doing the extra code enforcement. Property owners can challenge fees which are unreasonably high -- courts can order the fees to be lowered. 

Assuming that the City makes its findings, that they hold up in court, and that the fees are set to a legally justified level, there are still practical problems: 

Unless the City is, in fact, spending hundreds of dollars per month per vacant property on reasonable things, the fees will be low -- perhaps too low to provide any incentive to property owners to change. 

Conversely, if the fees are justifiably high enough, property owners have an incentive to populate vacancies with placeholder tenants that don't necessarily contribute in any significant way to the local economy. In this way, the only practical outcome might be new businesses whose ultimate function is to turn on the lights during business hours and perhaps maintain a window display. (Aside: in Berkeley, you'd think, people could get very creative about such placeholder businesses. Perhaps this would be good policy.) 

Proposing a "vacancy registration fee" can, however, win political props for a politician, even if no fee is ultimately imposed. Arreguin's action here submits the idea for consideration by City staff. That makes him look good even if the idea dies there or if staff comes back with a negative recommendation.