‘Split-Roll’ Advocates Put Prop 13 Revision Measure on California’s November Ballot

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Commercial Property Owners Could Pay Higher Taxes

By Ken Sullivan

Some of California’s commercial property owners could face a fundamental change to their property tax bills if voters approve a new measure to revise one of the state’s most contentious pieces of legislation.

Advocates seeking to reform the most populous U.S. state’s landmark property tax law known as Proposition 13, which allows properties to be reassessed only when they are sold or change hands, gathered enough signatures to get the measure on the November ballot. Roughly 1.7 million signatures were submitted to county registrars’ offices by Schools and Communities first, an umbrella group for Proposition 13 reform that includes teacher and labor unions and community groups.

The revisions proposed by the ballot measure would allow for more frequent property assessments based on market value for some commercial and industrial properties, as well as for land. Single-family homes, multifamily complexes, standalone businesses and agricultural land would be kept under the current rules.

If approved, the revised measure would generate an additional $12 billion annually for local communities and schools.

First approved by California voters about four decades ago, the law has allowed the state to cap property-tax increases at 2% each year for homes, commercial properties and land. Properties are then reassessed only when sold at 1% of the sale price. Reform proponents say that, as the law stands, it has been hard for local governments and schools to pay for services because so much of their funding relies on property tax revenue.

The proposed split-roll tax – which means it would split the property tax roll between residential and commercial properties – is vehemently opposed by industry groups such as the California Business Properties Association, California Chamber of Commerce and the California Business Round-table.

“It’s clear that the public employee unions behind the largest property-tax increase in state history are willing to spend and do whatever it takes to raise the cost of living for working families,” said Rob Lapsley, president of the California Business Round table and co-chairman of the Californians to Stop Prop 13 and Stop Higher Property Taxes.

Toby Boyd, president of the California Teachers Association, one of the largest teachers’ unions in the country and a major funder of the Proposition 13 reform effort, said Schools and Communities First hopes the measure helps provide resources for public education, healthcare, housing and public safety to California’s students and families.

“At this moment, we are witnessing the need for this very measure as educators, healthcare workers, first responders and communities as a whole grapple with the COVID-19 pandemic and its effects on each one of our lives,” Boyd said in an emailed statement to CoStar News. “The lack of resources has become ever-so-evident with so many students and families across California not having access to internet or computers.”

Schools and Communities First began efforts in November to collect the required 1.6 million signatures and secure endorsements from elected officials throughout the state after it refiled a previously submitted similar measure with the California Secretary of State in August with changes aimed at making it more palatable to voters, especially small businesses.

The original measure, known as the California Tax on Commercial and Industrial Properties for Education and Local Government Funding Initiative, first qualified for the Nov. 3 ballot in October 2018 after proponents collected the more than 585,000 valid signatures required by state law. However, the Schools and Communities First campaign scrapped the measure in an attempt to gain wider public support among voters, refiling the new initiative dubbed the California Schools and Local Communities Funding Act of 2020, which proponents said provides more tax relief and other protections for small businesses.

CoStar reporter Randyl Drummer contributed to this story. This article has been republished with permission from its author, Ken Sullivan.

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