A ‘Clear’ Senior Exemption
- Livable El Cerrito
- 2 days ago
- 6 min read
If the library tax passes, homeowners who are at least 62 years old with a household income below $55,182 should be able to apply to the city for an exemption to the tax, City Council members said Tuesday. A resolution stating this will be brought back to the council for a vote at its next meeting, according to City Manager Karen Pinkos.
During an April 7 study session, City Attorney Sky Woodruff told council members they could either “clarify” an existing senior exemption or add to the exemptions stated in the library tax measure that will be on the June 2 ballot.
Tough-To-Get Senior Exemptions
The stated senior exemptions have sparked weeks of critical public comments at City Council meetings, on social media, and elsewhere. Many residents said the exemptions would be difficult, if not impossible, to obtain. Recently the “No on C” campaign listed “fake senior exemptions” as a reason to vote against the tax.
“Destroying Trust”
On Tuesday night, El Cerrito resident Susan Obayashi said the wording of the senior exemption in the library tax measure “is absolutely misleading because one (option) has been unfunded since 2010 and the other exemption is only a postponement of the tax.”
“I think misleading the residents of El Cerrito continues to destroy trust,” she said.
She asked, “If the City Council were to pass a resolution about the exemption, how long is the resolution good for? Is it good for that tax year? Would it have to be re-voted on every year by the City Council? Or when new City Council members are elected?”
Later in the meeting, City Manager Pinkos said, “Resolutions are in effect until they are repealed by the council.”
“Interpreting” An Exemption
The city attorney said that changes to the tax measure cannot be made prior to the election, but the council can state its intentions if the measure passes.
The initiative states that seniors can apply to the city for an exemption if they qualify for either of two state programs. One program, the Gonzales-Deukmejian-Petris Senior Citizen Property Tax Assistance Law, has not been funded since 2009 and there is no way to apply for it. The other, the Senior Citizen Property Tax Postponement Law, provides a tax deferral rather than an exemption and places a lien on the homeowner’s property until the tax is paid later, presumably when the home is sold.
The exemptions are similar to those listed in the city’s Measure H Parks and Recreation Tax, passed by voters in 2019, as well as those in the Measure A Swim Center Tax approved in 2000.
No Current Exemptions to Measure H
No one currently qualifies for exemptions under Measure H.
Woodruff said a staff review of city files found no record of any applications for the exemptions.
“Consequently, no property has received the exemption, at least based on staff’s review of records,” Woodruff wrote. “There are also no records of an application being denied because a property owner did not qualify.”
Why No Applications?
In public comment Tuesday, resident Bill Barish expressed concern that the Measure H exemption has not been claimed by anyone over the years.
“Have you looked at those application papers and the renewal processes for any of the proposed exemptions…to understand why no one has ever applied for any of them?” Barish asked. “What is keeping people from going ahead to apply? I think it would be incredibly important for voters to know about this.”
Woodruff said the exemptions stated in the initiative must remain in place, but they may be “clarified” and other exemptions could be added.
$1M/Year Price Tag for Broad Senior Exemption
In a report, Woodruff described some alternative exemptions and estimated their costs. Woodruff said he obtained the figures from a consultant, Strategic Economics.
A senior exemption for all homeowners over 60 would allow 3,271 households to apply, he said.
This could reduce total tax revenue by $1,083,701 per year. According to a recent report from the city, the initial gross tax revenue from the tax would be about $3,156,019.
“Since almost half of homeowners in El Cerrito would qualify for an exemption that started at age 60, such an exemption could reduce total revenue by half, if all qualifying homeowners opted to apply for the exemption,” Woodruff wrote.
He said this would arguably frustrate the initiative’s purpose of building a library and that is not a change that could legally be made. He described some other options and estimated their costs.
Income-Only Exemption
Woodruff said an exemption based solely on income could be added. If those with household incomes below $50,000 were eligible, about 673 households could apply and the loss of revenue could be about $222,763 per year, or 7% of first-year tax revenue, Woodruff wrote.
Age Plus Income Exemption
Although he did provide data for homeowners only, Woodruff said there are 818 households, including renters, that have an owner aged 65 or older and an income below $50,000/year. While renters could not claim the exemption, Woodruff said this figure shows that the maximum loss of tax revenue from this option might be about $291,611 per year.
“Clarifying” An Existing Exemption
City Council members then agreed that the most attractive option would be to “clarify” the one exemption that exists and is named in the initiative, the Senior Citizen Property Tax Postponement Law. Rather than requiring low-income seniors to apply to the state program, the city could use requirements for the program but administer it at the city level.
Those seeking exemptions would need to apply and re-apply every year.
The library tax initiative states that the funds it generates cannot be used to pay city salaries.
City Manager Karen Pinkos said the city could administer the tax without using library tax funds to pay city employees.
The requirements for the Tax Postponement program are:
· Be at least 62 years of age, or blind, or disabled
· Own and occupy the property as their principal residence
· Have a total household income of $55,181 or less
· Have at least 40% equity in the property
· Not have a reverse mortgage on the property.
The maximum income amount is $55,181 this year, but it is indexed for inflation.
Consequences of Adding New Exemptions
Council member William Ktsanes pointed out that Woodruff’s report states that the council may not modify the exemptions expressly stated in the measure in a way that would cause other property owners to pay additional tax.
Ktsanes argued that adding more exemptions for some would always cause the remaining taxpayers to pay more.
Council member Rebecca Saltzman joined in questioning the potential for new exemptions, saying the exemption mentioned in the initiative “is already there.”
Saltzman added: “I think we should just clarify... Make it super clear so people know exactly what they are voting for.”
Council member Lisa Motoyama supported using the tax postponement law criteria “as a template.”
“I think it’s really about fixed-income seniors for whom this tax may be a hardship,” Motoyama said.
No Need for Equity Requirements
Council member Ktsanes said the Tax Postponement program requirements of 40% equity and no reverse mortgage could be dropped, because their purpose is to show the creditworthiness of residents taking loans from the state. Since the goal is a tax exemption rather than a deferred tax that must be paid later, that is not a concern here, he said.
Other council members agreed.
Saltzman said that the city application process would be simpler without the need to document five different requirements.
Initiative Co-Author States Intent
Michael Fischer, El Cerrito’s representative on the Contra Costa Library Commission and a co-author of the library tax measure, spoke about the issue during public comment.
“As one of the people involved in the drafting of that measure, my intent – despite what I think others sometimes imply – was to have an appropriate exemption. As a volunteer on policy matters with AARP (the American Association of Retired Persons), I know there are seniors who struggle with expenses. And that appropriate senior exemptions are one way these needs can be addressed. That’s what we intended.”
Questions Made Exemptions Clear
Resident Michelle Fadelli thanked the council for posing questions to make the exemptions clear and said adding flexible categories rather than a strict cutoff might be desirable, so there would not be a hard cutoff at one income level. Fadelli asked listeners to attend Q and A sessions being offered by the “Yes on C” campaign that are listed on the campaign’s website.
Confusion About Exemption Cost the City
Resident Ira Sharenow said confusion about senior exemptions in the initiative has been expensive for the city. He said Woodruff’s law firm bills on an hourly basis and hired the economic consulting firm Strategic Economics to provide data.
“My estimate, and it is only an estimate, is that between the attorney and the consulting firm, this single agenda item likely cost taxpayers $8,000 to $12,000,” Sharenow said.
Next Step
City Manager Pinkos said, “Based on direction tonight, we could bring back a resolution at the next City Council meeting. I think I heard a couple of council members talking about wanting to have clarity for the voters.”
That no one qualified for the senior exemption for Measure H is incorrect. No one applied. This is a significant difference.
This confusion could have been prevented if the two senior exemptions had been properly investigated and vetted before putting them on the ballot. Did anyone stop to analyze what their impact would be on library tax revenue? It doesn’t appear that the most basic preparation went into this aspect of the initiative.