CALIFORNIA SPLIT ROLL PROPERTY TAX
HELP PROTECT YOUR BUSINESS FROM A $9 BILLION TAX!
There has been a lot of activity on Split Roll Property Tax in California this year. The proponents of removing Proposition 13 protections from commercial property have opened up several paths of attack, including an effort to gather signatures for a proposition, introducing a bill in the State Legislature, funding of a full media effort, and aggressive efforts to get city councils and school boards to endorse these efforts.
We at BOMA California, and our partners in the commercial real estate work, are doing everything we can to track all of these efforts and push back. However, there is too much ground to cover so we are also asking that you, as potentially impacted members of the commercial real estate industry, help us in a grassroots effort to meet these threats and challenges.
As leaders of our industry, we ask that you keep informed on what is happening so you can educate colleagues, clients, tenants, and policymakers about the negative impacts that a split roll property tax would have on property values, leasing rates, jobs, and economic activity.
In the State Legislature Senator Holly Mitchell (D-Los Angeles) and Senator Loni Hancock (D-Oakland) proposed a Senate Constitutional Amendment (SCA 5) that if passed with a two-thirds vote of the Legislature, would create regular ongoing reassessments of commercial and industrial property, starting with the 2018-19 fiscal year. However, in a clever move to try to keep some business oriented groups from opposing the measure, SCA 5 retains tax caps for certain revenue generating residential and agricultural property.
Proponents of this measure have also included an exemption for property taxes under $500,000 of tangible personal property used for business purposes, in order to claim that the new tax scheme would not harm small businesses. We absolutely disagree since this threshold is so low, it will only filter out the tiniest of properties – while at the same time enacting a $9 billion tax increase that will hit any small business renting space in just about every commercial property in California.
Because SCA 5 must be approved by a two-thirds of the Legislature, the Governor’s signature is not required. The measure would then be placed on the November 2016 ballot. The main reason split roll proponents are pushing this legislative route – even though its success seems very unlikely – is that it would allow the measure to get on the ballot without having to spend time and money gathering signatures.
BOMA California, and our chapters, like BOMA San Diego, can continue to spread the word that measures like SCA 5 are truly bad for the economy, bad for jobs and bad for our state. On our end, we will continue to be a part of the leadership at the Californians to Stop Higher Property Taxes (CSHPT) and to be at the table with allied groups such as the California Chamber, CalTax, and the Howard Jarvis Taxpayers Association, to respond to these continued attacks on Proposition 13, through news media, social media, and direct contact with legislators. All of this will, in turn, make sure you have the tools to engage in the effort to protect yourself.
With those resources we recommend that you talk to anyone that will listen about how a $9 billion tax increase will hurt your business. Tell local officials what unpredictable taxes on your properties will do to your ability to remain viable and keep tenants.
You can also help by donating to the effort to fight the inevitable proposition. For this effort we are working with our umbrella organization, the California Business Properties Association, and have created the CBPA-Issues Pac where every dollar you contribute is being used to fight split roll tax.
Commercial real estate is being targeted. If we, as a collective group along with our allied groups, can raise just one percent of the $9 billion split roll will cost commercial real estate, we can effectively protect ourselves. How much would a split roll impact your portfolio, your business? Isn’t it worth just one percent of what ongoing increase would cost you in a single year to stop it? The return on this investment is potentially very high!
To learn more about the efforts of Californians to Stop Higher Property Taxes, please visit their website at: http://stophigherpropertytaxes.org.
Rex Hime is the President and CEO of the California Business Properties Association. CBPA is the “Recognized voice” of the retail, commercial and industrial real estate industry in the state of California. BOMA California is a member of CBPA. For more information please visit, www.bomacal.org or www.cbpa.com.