Tax changes to Prop 13 could bring California $10B a year

The ballot initiative would affect commercial property owners

TRD LOS ANGELES /
Feb.February 22, 2018 02:10 PM
Figueroa at Wilshire (Credit: Wikimedia Commons)

A proposed ballot initiative could raise up to $10 billion a year by changing the way commercial and industrial property values are assessed. About 60 percent of that money would be funneled to local governments, with the remaining 40 percent allocated for schools.

The office of state Attorney General Javier Becerra, is reviewing the amendment to Proposition 13, a statewide referendum that voters passed in 1978. The Attorney General’s Office released a summary of the measure this week.

The new measure would eliminate the existing cap on industrial and commercial property taxes statewide. That would mean those property owners would pay more each year. It would not affect the measure’s limit on residential property taxes.

If the referendum question makes it onto the ballot and a majority of voters favored it, those commercial and industrial properties would be taxed based on their fair-market value. Now, the same properties are taxed based on less than 1 percent of the last purchase price, with a maximum 2-percent annual increase.

The state found that the fair-market value assessment would bring California an estimated $6 billion to $10 billion each year, but would be heavily dependent on the strength of the real estate market in that given year. That was according to an analysis from the state’s nonpartisan Legislative Analyst’s Office.

Depending on the market, the stream of dollars flowing into the state “would be considerably more volatile than property tax revenues have been historically,” according to the analysis.

Some opponents say that property assessments are too subjective to be relied for taxation purposes, and that increased taxes would make it more difficult to do business in the state, leading to an exodus.

The proposed change would not affect the measure’s limit on residential property taxes. Proposition 13 passed in 1978, with the support of around 65 percent of voters.


Related Articles

arrow_forward_ios
Gov. Gavin Newsom (Credit: Emma McIntyre/Getty Images)

Newsom backs ballot measure to raise commercial property taxes

Newsom backs ballot measure to raise commercial property taxes
Los Angeles apartments (Credit: iStock)

Expanded unemployment has kept California renters afloat. But that’s set to expire

Expanded unemployment has kept California renters afloat. But that’s set to expire
A rendering of Times Mirror Square

Onni Group’s Times Mirror Square project clears major hurdle

Onni Group’s Times Mirror Square project clears major hurdle
Gary Gold, Paul George, Deandre Jordan, Jeff Bezos, and Garrett Camp (Credit: Getty Images, Flickr, Hilton & Hyland, Google Maps, Realtor, Pinterest, and iStock)

Long live NAR: Agents won’t defy powerful trade group in pocket listings spat

Long live NAR: Agents won’t defy powerful trade group in pocket listings spat
Mitchell Englander in front of L.A. City Hall (Credit: Lilly Lawrence/Getty Images, and iStock)

Ex-LA council member surrenders to FBI in real estate probe

Ex-LA council member surrenders to FBI in real estate probe
David Ryu (Credit: Getty Images)

LA becomes 1st city to enact ban on developer money

LA becomes 1st city to enact ban on developer money
From left: Jose Huizar, Huang Wei, Mohamed Hadid, Robert Herscu, Raymond Chan, and Arman Gabay, with Los Angeles City Hall (Credit: iStock and Getty Images)

Real estate’s role in LA corruption scandals

Real estate’s role in LA corruption scandals
From left: Governor Gavin Newsom, Assemblymember David Chiu, Senator Holly Mitchell, and Senator Nancy Skinner (Credit: Getty Images)

Here are the key housing and rent control bills state lawmakers are debating

Here are the key housing and rent control bills state lawmakers are debating
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...