City of East Palo Alto—Citizen Initiative to Amend Parcel Tax Ordinance

Ballot Question

To fund tenant rental assistance and other specified housing purposes such as affordable home ownership, affordable housing preservation, protecting residents from displacement or homelessness, and administrative expenses, shall the initiative measure requiring funds raised by the existing 2.5% tax on gross receipts (that cannot be passed on to tenants) when renting certain types of rental units, until repealed by the voters, which raises approximately $1.45 million annually, be adopted?

Type of Measure

Initiative Measure – prepared by citizens through review and signature gathering.

Explanation

The current code imposes a 2.5% tax on gross receipts from residential rental units, with certain exceptions, including landlords demonstrating financial hardship, apartments rented to people with federal assistance vouchers, rooms rented in single-family homes, new rental construction for the first three years, and accessory dwelling units.
The amendment does not change the tax rate.
It assures that the money will not be used for general governmental purposes.
At least 30% of the funds must be used for tenant rental assistance.
No more than 20% of the funds may be used for staff and overhead costs to administer the tax.
The remaining revenue may be used, at the city's discretion, to support affordable homeownership, preserve affordable housing, provide tenant rental assistance, or protect residents from displacement or homelessness.
A new subsection, 5.08.125.H., is added to ensure that the council shall periodically review housing policy, housing programs, and related issues to determine how and to what extent the city should fund such programs.

What the Description Means
The measure is meant to limit the use of money generated by a currently existing 2.5% tax on certain rental units to fund rental assistance and other specified housing purposes and prevent the money from being used for general governmental purposes.

Arguments in Favor
The current 2.5% tax is levied on rental revenue for residential landlords, most of whom live outside of East Palo Alto.
The tax yields about $1,450,000 annually.
The measure will ensure these funds go to housing programs that 70% of East Palo Alto residents voted for in November 2022.
It requires the City Council to review expenditures annually and seek public input on using the funding.
It was placed on the ballot unanimously by the City Council after a community signature-gathering campaign.
It prohibits landlords from passing the tax on to tenants.
No arguments in opposition have been submitted.

Support
Martha Barragan, Vice Mayor, East Palo Alto
Fr. Lawrence Goode, Rector, Father St. Francis of Assisi Church
Stewart Hyland, former organizing director of the Housing Leadership Council of San Mateo County
Antonio Lopez, Mayor, East Palo Alto
Appollonia “Mama Dee” Uhila, Director, Anamatangi Polynesian Voices

Opposition
None noted

Costs Associated With This Measure
None noted