Newark City Council is asking for the General Assembly’s approval to levy a tax on residential and commercial leased properties.
The proposed tax would be up to one percent on rental properties.
Dozens of students and landlords showed up to Monday night’s council meeting to oppose the plan, most arguing the tax would be passed on to tenants.
Kevin Mayhew is President of the Newark Landlord Association.
“Most likely, I’ll be raising the rent if this tax is imposed, probably by $10, around that," Mayhew says. "A gross rental tax, will most likely, as everybody has said here, be passed on to the tenants. So it is not a landlord tax, it is going to become a tenant tax.”
Mayhew adds he feels the city already benefits from rental permit fees and property taxes on new units.
But Councilman Travis McDermott says property taxes have gone up three years in a row, last year at 7.5 percent.
“I was mad," McDermott says. "And I said we need to come up with different revenue streams, continually going back to the well to raise property taxes isn’t going to be a long-term financial solution to our problem. And so this is just one piece of a puzzle, and that doesn’t mean we have to implement it.”
Councilman Jason Lawhorn was the lone dissenter in a 6-1 vote, calling the tax fundamentally wrong, and suggesting Newark find revenue streams from sources beyond residents.
Life-long Newark resident Sean Ruohonen says he rents out several houses on East Park Place that his parents bought in the 1970s, but this tax would force him to sell.
“Countless hours of work, my parents pouring money into these houses to maintain them, for a small guy like me, this is hard work," Ruohonen says. "Bringing a tax like this would force me to sell these homes that have been a part of my family.”
Several council members noted they may not impose the tax if they lobby enough to support to receive more PILOT funds from UD.
