Union City voters to decide on measures in November

Union City voters will be asked to decide in November whether the city should impose a cannabis business tax and convert to a charter city so it can raise taxes on properties sold in the city.

The two measures were approved for the Nov. 6 general election ballot by the City Council on Tuesday and are intended to bring more than $6 million into the cash-strapped city’s coffers.

The vote for placing the cannabis business tax measure on the ballot was 4-1, with Councilman Gary Singh dissenting. Singh has voted against any actions that allow and permit marijuana businesses to operate in the city.

If approved, the cannabis tax measure could raise around $1.4 million annually for the city in unrestricted general fund money. Tax rates levied against marijuana business could vary widely, with the council having final authority to raise or lower them.

Those who cultivate the drug would be required to pay between two and eight dollars per square foot of growing space based on the type of lighting used and type of growing operation. Rates would increase beginning in 2021.

Those selling, testing, distributing or manufacturing marijuana would have to pay between one and six percent of their gross receipts to the city.

No marijuana businesses operate in the city yet, but the council earlier this year signaled it would permit two different operations. The city only sanctioned marijuana businesses within its borders late last year, after having banned them in 2005.

The vote for placing the charter city and real estate transfer tax increase measure on the ballot was also 4-1, with Councilman Lorrin Ellis dissenting. Ellis said the city can do more work to control costs instead of adding more expense to the already costly housing supply market.

If the measure is approved, the city would convert from a general law city — one that chiefly follows state law — to a charter city, where more decision-making power is held locally.

The same measure also asks voters to approve or deny raising the real property transfer tax, also known as a real estate transfer tax, something only voters in charter cities can authorize.

The tax is applied when a property is sold anywhere in the city. Currently, based on state law, the city collects 55 cents per $1,000 of value in a sale. The city’s measure proposes raising that to $10 per $1,000. Eight other cities in Alameda County have raised their rates to between $4.50 and $15 per $1,000.

The measure could raise $5 million annually for the city, city reports said.

“I’m still skeptical of going down this path … I think there’s more work that the city can do on the financial side, both managing costs as well as revenue growth,” Ellis said at the council meeting Tuesday.

The city’s most recent budget included some spending reductions in the previous and current fiscal year. The city is anticipating an average annual deficit of $4.3 million through fiscal year 2021-22, according to city reports.

Mayor Carol Dutra-Vernaci said there are limited solutions for the city currently, comparing city efforts to balance the budget to “trying to right a sinking ship.”

She said the budget is balanced, possibly through these two measures, the city might be able to hold off on asking for more money for things like police and fire services through a renewed parcel tax measure down the road.

She also said the real estate transfer tax is a “oncein-a-lifetime hit” for many people, and said if it didn’t pass the city would likely need to go into “cut mode and impact the services that we;re currently providing.”

Both measures would require a simple majority of voters approval to go into effect, city reports said. A consultant hired by the city to survey residents about these measures found about 52 percent of people said they would definitely or probably vote yes for the charter city and real estate transfer tax measure.

About 63 percent said they would definitely or probably vote yes for the cannabis business tax measure.

While city staff reports say the money from these measures would be aimed at maintaining or improving “essential services” such as police and fire, youth violence and gang prevention programs, senior services and the maintenance of city parks, the revenue would go into the general fund as unrestricted money.

Out of hundreds who took an online city survey online asking about local revenuegenerating measures, dozens said they wouldn’t support them, according to anonymous responses in a city report.

One respondent said they would want to see specific plans for the money generated, and would want to “understand all the possibilities of how the money could be spent.”

Many others said the city should manage its current resources better, like any other household must.

“If we don’t have the money to cover our bills we must sacrifice something,” one response read. “I wish our city would do the same.”