California’s Proposition 15 Would Undo Limits on Commercial Property Taxes

California’s Proposition 15 Would Undo Limits on Commercial Property Taxes

  • October 27, 2020
  • 0 comments

More than 40 years after imposing severe restrictions on property-tax increases, California voters might begin rolling them back next week, sending shivers through the state’s commercial real-estate industry.

A measure on the Nov. 3 ballot would make the most significant changes to 1978’s Proposition 13 by allowing local governments to begin assessing commercial property based on its current value, rather than capping increases from the last time it was sold.

But this year’s measure, known as Proposition 15, wouldn’t apply to residential property, allowing homeowners to continue to enjoy the state’s longstanding limits on property-tax increases. “The opponents have adopted a divide-and-conquer strategy,” said Matt Regan, a senior vice president of the Bay Area Council, a business group that opposes the measure. “They’re saying we’re protecting residential tax rates, but we’re going to vote the commercial property-tax payers off the island.”

Once fully implemented, Proposition 15 would generate between $6.5 billion and $11.5 billion in additional annual tax revenue for local governments, according to California’s nonpartisan Legislative Analyst’s Office. Proponents say the money is needed for education, health and social services that have been underfunded because of Proposition 13’s limits.

From the time Proposition 13 passed, through 2013, local government revenue per-person in California grew 36%, compared with a nationwide average of 69%, according to the Legislative Analyst’s Office. Still, at nearly $3,500, per-person local-government revenue remained slightly higher in California than the national average of about $3,000.

Source Article