When a nonprofit bought this lot at 7600 MacArthur Blvd., it was surprised to get a bill for a $6,000 vacancy tax. Credit: Amir Aziz

POOR Magazine, an Oakland nonprofit led by formerly and currently unhoused people, bought a vacant lot in deep East Oakland in May 2020 with grand plans to build housing. The group was energized by their earlier successful work on a nearby property, including the purchase of a duplex that it turned into rent-free housing for formerly homeless people, and the construction of four additional townhouses at that site. 

But members of POOR Magazine say they have run into multiple barriers trying to launch housing programs, which they call Homefulness, at both that original site and the new vacant lot they purchased last year. They cited expensive city permits, parking requirements, and a $32,000 affordable housing impact fee they were assessed when they pulled building permits for the townhouse project. They were eventually able to get the city to rescind the impact fees.

However, another big surprise came when POOR Magazine opened its first property tax bill for the new vacant lot in 2020, a few months after the organization bought the land. The group had to pay Oakland’s $6,000 vacant property tax. The tax was for the previous year, 2019, when Poor Magazine didn’t yet own the lot.

“There is nothing that has been easy about this process,” said Lisa “Tiny” Gray-Garcia, co-founder of POOR Magazine, at a recent city hearing where her group asked Oakland officials not to impose the tax on them. “It doesn’t surprise me that we’re now being charged, as poor builders, a fee that’s meant to create homeless services.”

In 2018, 70% of Oakland voters approved Measure W, the vacant property tax. Owners of most vacant buildings and land must pay the flat annual $3,000 to $6,000 tax, based on the type of property. It’s a housing-crisis measure, meant to encourage landowners, many of whom don’t live in Oakland, to either build housing or sell their land to someone who will. If they build a housing project or rent out an existing building, they can avoid the tax. 

In its first year, the tax brought in $5.6 million, which is earmarked for homelessness services and illegal dumping mitigation.  

The tax comes with several exceptions. For example, it can’t be applied to a property if the owner is a nonprofit organization or is considered very low-income, or if the lot is under active construction. POOR Magazine later qualified for the nonprofit exemption, and wasn’t required to pay the tax on their most recent bill.

So why, lawyers for the nonprofit ask, was the group made to pay it the year before, covering a time period when it wasn’t even the owner? 

According to the city, the tax is connected to the land, not the owner. So because the property was vacant and not eligible for any exemptions in 2019, it qualified for the vacancy tax. By the time the tax bill for that year came in the mail in 2020, POOR Magazine was the owner, so it had to pay the tax, regardless of its nonprofit status. 

POOR Magazine’s leaders believe the way the city is administering the tax could lead to recurring issues for organizations and developers who buy vacant lots with good intentions and are saddled with the previous owner’s taxes. 

The Sustainable Economies Law Center, which is representing POOR Magazine, requested a hearing to appeal the tax for the vacant Homefulness property. On Oct. 13, each side made its case.

Homefulness aims to “unsell” land in Oakland

Vacancy tax hearing on Oct. 13. Clockwise from top left: Hearing officer Lisa Miller, members of POOR Magazine, Sustainable Economies Law Center attorney Janelle Orsi, auditor Chris Le. Credit: Microsoft Teams

POOR Magazine has operated as a media organization and education program since it was launched in 1996 by Gray-Garcia and her mother, who spent years living on the streets. They run a school, Deecolonize Academy, which emphasizes pre-colonial and revolutionary history alongside arts and science education.

In 2011, POOR Magazine bought the duplex at 8032 MacArthur Blvd. for $89,000 outright, since none of the group’s members had the credit to get a loan. In 2015, they built four additional townhouses on the site, largely with volunteer labor. Homefulness is about “unselling” land, POOR Magazine says, meaning it works to take property out of the capitalist market, which has created intergenerational racial wealth gaps. Residents in Homefulness properties can keep their stable housing for as long as they want.

POOR Magazine’s financial resources come from individual donations, or what it calls “community reparations.” Donors attend a workshop called “People Skool,” where people who identify as having privilege learn about redistributing their wealth to efforts led by BIPOC or poor organizers. Other people volunteer labor, time, and skills to POOR Magazine’s projects, like Homefulness. 

The organization bought the vacant lot at 7600 MacArthur Blvd. for $350,000, reported The East Bay Times. The group is currently devising plans to build housing and other programming there. 

Gray-Garcia and other members of POOR Magazine said at last week’s hearing that they’re being unfairly taxed for trying to solve a problem that directly affects them.

“We’re actually building and creating our own solutions to an extremely serious housing crisis,” Gray-Garcia said. The irony of being hit with a vacancy tax while trying to build on vacant land “would be laughable if it wasn’t so tragic,” she said.

Her son, Tiburcio Garcia, said he and his mother would still be homeless if they hadn’t been able to move into the Homefulness duplex, which gave him a stable living situation and improved his mental health. 

“We’re planning to replicate what we’ve done here for that area of MacArthur,” he said. “You can see the changes we’ve effected on this community…that’s why another fine is hurting us. We want to get as much housing as we can out there.”

When Oakland legislators voted to put the vacancy tax on the 2018 ballot, they said it was designed primarily to penalize speculative investors who sit on vacant parcels until they can make the biggest profit.

Councilmember Rebecca Kaplan, who wrote the vacancy tax legislation that put Measure W on the ballot, was not available for an interview for this story. But her chief of staff, Kimberly Jones, said the councilmember thinks POOR Magazine should be let off the hook.

“We don’t believe that they should be made to pay this,” Jones said. “It’s an unfair burden to an affordable housing developer, that is blocking affordable housing production.” 

Chris Le, a city of Oakland auditor who represented the city at the hearing, said he doesn’t disagree.

“We really appreciate that you’re trying to help the homeless,” he told POOR Magazine during the hearing. That’s why Oakland has exempted the nonprofit from paying the tax from now on. 

But, he said, it’s a different story for the year the property was sold.

Taxing the land or the land owner?

Empty lot on 7600 MacArthur in East Oakland
POOR Magazine is currently developing plans for the lot it purchased in 2020. Credit: Amir Aziz

Oakland’s vacancy tax is unusual. Most of the time, local property owners are charged taxes on their real estate in July and the bill is sent to them for payment in the fall. But for the vacancy tax, the city and county first determine if a property was vacant for the previous year. If it was, they charge the tax to whoever owned the property on Jan. 1, the year after it was vacant. But they don’t send this tax bill to the owner in January; instead the authorities notify the owner about what they owe much later in the year, in the fall, when they send the overall property tax bill that includes other local parcel taxes.

The result is that if a vacant property changes ownership after January, from someone who would normally owe the tax to a nonprofit like POOR Magazine that should be exempt, it’s very likely that the new owner will still owe the previous year’s tax. 

POOR Magazine’s legal representatives noted at the recent hearing that this outcome seems to fly in the face of the intent of the tax.

“It is clear that the ordinance was not designed to penalize the people and organizations that are buying and remedying the problem of vacant properties,” said Ari Pomerantz, legal intern with the Sustainable Economies Law Center, in a presentation at the hearing.

The city so far hasn’t budged in its interpretation of the law. “When POOR Magazine purchased the property, they also purchased its liabilities,” said Le, the auditor. “This is a property tax and it goes with the land.” 

So it comes down to a legal disagreement: is the tax applied to the owner of the property or to the property itself? It’s a wonky legal question whose answer could end up affecting many new owners of vacant parcels.

The vacancy tax has only been in effect for two years. And there hasn’t been an evaluation yet to see if it is accomplishing its purpose of spurring housing construction and reducing blight on vacant lots. 

According to city data, 1,736 parcels were taxed the first year and 903 received exemptions. 

Hearing officer Lisa Miller said she will release a decision for 7600 MacArthur within 30 days.

Natalie Orenstein covers housing and homelessness for The Oaklandside. She was previously on staff at Berkeleyside, where her extensive reporting on the legacy of school desegregation received recognition from the Society of Professional Journalists NorCal and the Education Writers Association. Natalie’s reporting has also appeared in The J Weekly, The San Francisco Chronicle and elsewhere, and she’s written about public policy for a number of research institutes and think tanks. Natalie lives in Oakland, grew up in Berkeley, and has only left her beloved East Bay once, to attend Pomona College.