On Tuesday, Los Angeles voters will decide on Measure EE, which would establish a new tax on all properties within the city’s sprawling Unified School District.
If approved, the referendum would increase taxes on property owners, with most single-family owners feeling far less of a sting. The ballot measure needs the approval of two-thirds of voters to pass.
What is Measure EE?
Measure EE is a ballot initiative that would institute a 16-cent-per-square-foot tax on built space on all properties within the Unified School District. The majority of those properties are within the city of L.A., but also West Hollywood, as well as parts of Long Beach and other cities in the county.
Money raised would supplement the school district’s $7.5 billion annual budget with few limitations on how it is spent. The school district estimates Measure EE would bring in $500 million annually over its 12-year life span. That amount is roughly the school district’s yearly deficit.
What impact would the tax have on developers and property owners?
Because it is calculated on a per-square-foot basis, the impact would depend on the size of the individual property owner or developer’s asset. The L.A. Times estimates that 80 percent of revenue from the measure would be paid by owners of commercial, industrial, and multifamily properties.
The owner of an average size home in L.A. — 1,800 square feet as of 2016 — would pay around $288 more in taxes annually. By contrast, the owner of a 100,000-square-foot warehouse would pay around $16,000 more. Korean Air, the owner of the Wilshire Grand Downtown, would pay around $118,200 per year in additional taxes on the roughly 740,000-square-foot mixed-use tower.
Who else would pay?
Commercial landlords are likely to pass some, if not all, of the additional tax costs onto tenants. Higher rents could reduce the pool of tenants who can afford space, which could eventually lead to higher vacancies.
Give me the pros and cons.
First the cons: Property owners and developers say the per-square-foot cost disproportionately affects large landowners, who will see no direct benefit from the tax. Most organizations representing property owners oppose Measure EE.
The Building Owners and Managers Association of Greater Los Angeles argues Measure EE fails because it doesn’t factor in property value. BOMA/GLA argues instead for a flat tax. The group says that would evenly spread the burden across the pool of taxable property owners. That would likely never fly because small duplex or condo owners would pay the same as large corporations.
Now the pros: Those who support the measure say the funding is necessary to ensure children receive a quality education. The money can be put toward reducing class size and hiring more teachers, along with a raft of other improvements.
Could the money raised be used to buy property for new schools?
No. That is one of the restrictions. It also can’t go to defend against lawsuits. But opponents are skeptical about that. L.A. Chamber of Commerce President Maria Salinas questions whether money raised from the tax “will actually make it to the classroom,” according to the L.A. Times. Mayor Eric Garcetti is one of the political heavyweights supporting the measure.
Are there any exemptions to paying up?
The only properties exempted from the tax are the primary residences of senior citizens, and properties owned by people receiving disability benefits. There is lingering confusion over other potential exemptions because of last-minute change by Schools Superintendent Austin Beutner.
It said that “all buildings or structures erected or affixed to the land” could be taxed. To some, that meant pools, garages, parking lots, and other non-residential structures could be taxed, according to LAist. The school board passed a resolution to confirm those structures would not be taxed, but the body could reverse that decision if the parcel tax is passed.