New Tax Angers Small Oakland Retailers 

City fee on used book and clothing stores and antique shops sparks a backlash. Plus, AC Transit admits that some Van Hool buses have been accident prone.

Small Oakland retailers, already suffering because of the recession and the proliferation of Internet shopping, are angry about the City of Oakland's decision to begin collecting a hefty new business tax. The fees could amount to more than $600 per business and apply to sellers of used goods — such as used book, clothing, record, and toy stores, and antique shops. The city has sent letters to dozens of such retailers across Oakland, demanding that they pay the tax and force their employees to be fingerprinted, or face additional penalties.

But the city's demand is sparking a revolt — not unlike the backlash over the council's decision this summer to raise parking meter rates and extend hours to 8 p.m. One retailer said she does not intend to pay the tax. "I don't think this should apply to our business," said Amy Thomas, owner of Pendragon Books, a bookstore on College Avenue in Rockridge that sells new and used books. Thomas, who also owns Pegasus Books in Berkeley, said that the City of Berkeley has never attempted to implement such a tax. Nor has the City of Alameda.

Traditionally, the tax has applied only to pawnbrokers. It's based on the state's Secondhand Dealers' law, a 50-year-old statute written to help law enforcement track stolen goods. Historically, cities, which collect the tax and can keep most of its proceeds, have exempted businesses not usually associated with the stolen-goods trade — such as used bookstores and antique stores. Pawnshops, by contrast, have had to pay the tax.

But in the past few years, several cities have begun imposing the tax on other businesses, too, said Carl Brakensiek of the California Alliance of Resale Merchants and Collectors, a statewide trade group that has followed the issue. As the economic downturn has bludgeoned city budgets, local officials have desperately searched for ways to raise revenues. "Some municipalities are doing this while others have chosen not to," Brakensiek said of the tax.

In Oakland, however, sudden implementation of the tax does not appear related to a search for new revenues. Instead, employees apparently took it upon themselves to launch the program. Nancy Marcus, whose title is "administrative assistant 1 for special events permits," said that two new employees had discovered that Oakland could legally require many retailers to apply for license like pawnbrokers, and then begin collecting the fees.

So in an August 13 letter that Marcus said she sent to 48 Oakland retailers, she told business owners they had to pay $310 for an application fee, $195 for a state license fee, and $57 to $67 to fingerprint each employee. Businesses must pay annual fees in succeeding years. Marcus gave business owners a deadline of September 10 to comply. Under state law, once a business acquires a secondhand dealers' license, they must keep meticulous, detailed notes of every item they buy and sell, including the private personal information of the persons involved in each transaction. Failure to comply with the law is considered a misdemeanor that carries a fine of up to $1,500 or two months in county jail.

The law makes sense for pawnbrokers, but applying it to used bookstores or antique shops is another story. Oakland's implementation of the law also appears to have been arbitrary, and not the result of an exhaustive effort to determine exactly who the law should apply to. After all, in addition to pawnbrokers, there have to be more than 48 businesses that buy and sell used goods in Oakland. In fact, under a liberal reading of the law, there is no reason it shouldn't also apply to garage sales.

The license tax also gives another advantage to online giants such as and eBay, which won't have to pay the fees, fingerprint people, or maintain cumbersome records, even though they also transact used goods and already have an edge because they don't charge sales tax. "If I have to do it," Thomas said, "I think everybody should have to do it."

Ironically, a 2006 bill authored by Leland Yee, a state legislator from San Francisco, would have specifically exempted used bookstores and antique shops (but not used clothing or toy stores) from the law. The bill was specifically aimed at coin dealers and was pushed by pawnbrokers who wanted coin dealers and other merchants to help pay for a multimillion-dollar statewide electronic database to track stolen goods — which, to this day, does not exist. But retailer associations and Internet sites helped defeat the bill because they said it would hurt business. They also knew at the time that most cities, including Oakland, weren't collecting the tax from anyone other than pawnbrokers.

Van Hools Have Been Accident Prone

Top AC Transit officials admitted publicly last week that many of their Belgian-made Van Hool buses have been accident-prone and costly to maintain. The public acknowledgement was significant because top agency officials have staunchly defended AC Transit's exclusive contract with the firm and argued that the Belgian buses are superior to American-made ones, despite the fact that the agency's own records show the Van Hools are dangerous for the elderly and for people with mobility problems.

The surprising admission, which was also made by agency General Manager Rick Fernandez, one of the biggest backers of the Van Hools, came during an AC Transit Board of Directors subcommittee meeting. Board member Greg Harper had asked agency staff to compile a report on bus maintenance costs. The report revealed that some Van Hool models have been accident prone, while others, particularly the 60-foot accordion-style buses, are costlier to maintain than the other buses in AC Transit's fleet, even though they are much newer and thus should be cheaper to keep running. Agency records show that Van Hools are more expensive to buy than some American-made buses.

The revelations prompted Harper to question his support for the Belgian buses over the years. "I have sat up here and defended the Van Hools ... thinking that we had a better model bus," he said. "Maybe I made a mistake."

At first, Fernandez attributed the higher repair costs to Van Hools being assigned to busier bus lines that have more stops and carry more passengers, which puts more wear-and-tear on the vehicles. But after questioning by Harper on why some of the Van Hools, specifically the forty-foot model, have more accidents, break down more often, and have higher parts costs than some older American-made buses, AC Transit staffers, including Fernandez, also blamed the unusual design of the bus. "The lion's share of it ... it's the tail swing," said the author of the report, AC Transit Director of Maintenance Bob Bithell, referring to the forty-foot Van Hool model. "Those buses smack a lot of things when they move in and out of bus stops."

As this newspaper has previously reported, AC Transit bus drivers have long complained about the long back end of the forty-foot Van Hools, one of the workhorses of the agency's fleet (see "The Buses from Hell," 1/23/08) The bus's peculiar design includes a short wheelbase, which makes it harder to maneuver and creates a bouncy ride. In fact, some bus drivers refuse to pull completely into smaller bus stops because the long tail end of the bus swings dramatically back and forth and hits things. Those drivers stop the bus in the street, blocking traffic and forcing riders to step off the curb and walk out on the street to get on board. In fact, a bus driver was fired a few years ago in part for getting in a fight with an agency executive over the issue (see "Agency Fires Driver Over New Buses," 4/2/08).

The design problem prompted AC Transit officials to require Van Hool to modify their new forty-foot buses so that they have a traditional wheelbases, like American buses. Fernandez noted that the new models don't have the same accident problems. However, there are still more than 100 of the old forty-footers in the fleet and it's too costly to retrofit them. Fernandez said that bus drivers have learned how to drive the forty-footers better, and now have fewer accidents. But neither Bithell nor the report could substantiate that assertion, because the report looked at bus accidents and costs over a four-year period, from 2005 to 2009, and did not break them out by year. As a result, Harper asked Bithell to come back with more detailed information on bus accidents and maintenance costs, including labor costs, along with data for how long each bus type stays in the shop when they break down or get in accidents.


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