Proposition 15 Will Make California’s Already Bad Housing Crisis Even Worse

California Building Industry Association joins coalition opposing the largest property tax increase in state history

SACRAMENTO, CA – In November, California voters will consider Prop 15, the $12.5-billion property tax increase that will distort local zoning decisions and make the housing crisis even worse. Prop 15 will ultimately decrease housing supply—driving rents and home prices higher as local governments are incentivized to maximize local revenue by approving higher-taxed commercial and industrial developments over affordable housing.

Prop 15 will raise property taxes on commercial and industrial property by requiring reassessment at least every three years. The higher property tax revenues generated by business properties will drive local governments to favor commercial and industrial development over residential construction. Ultimately, Prop 15 will reduce the supply of housing for Californians, especially the state’s most needy, and lead to higher rents and home prices.

Builders from across the state, including the California Building Industry Association, recently announced their opposition to Prop 15.

“California is experiencing a housing affordability crisis. Millions of families are recently unemployed and at risk of being homeless. Proposition 15 makes the current crisis worse by discouraging new home construction at the worst possible time,” said Dan Dunmoyer, president and CEO of the California Building Industry Association. “If California wants to resolve the state’s housing affordability crisis, the first step must be to reject Prop 15.”

“It’s hard enough to find affordable housing in California now. Discouraging new homebuilding will only make the problem worse. We are looking at a huge cost of living increase unless voters defeat Prop 15,” added Reverend Jonathan Moseley, western regional director and president of National Action Network LAX.

“Lack of affordable housing is a major driver of poverty across California. If voters want solutions on the housing crisis, they must vote no on Prop 15,” said Debora Allen, board director of the San Francisco Bay Area Rapid Transit.

Read more about the flaws in the $12.5 billion-a-year property tax hike here.

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Split Roll Tax Initiative Will Have Substantial Impact on Agriculture

Agricultural groups have serious concerns as it pertains to the split roll tax initiative that will be appearing on the November ballot. If the measure is passed it will make serious changes to Proposition 13 in reassessing commercial and industrial properties at fair market value. The California Farm Bureau Federation (CFBF) has joined the Californians to Save Prop 13 + Stop Higher Property Taxes coalition in opposing the initiative, as it could have devastating effects on the agricultural sector.

ICYMI: Assessors warn “costly split-roll initiative won’t deliver promised revenues” in bipartisan op-ed

Officials charged with administering Prop 15 say its “impossible” to implement

SACRAMENTO – Santa Clara County Assessor Larry Stone and San Bernardino County Assessor Bob Dutton coauthored an opinion piece published in the Sunday edition of the San Jose Mercury News and the East Bay Times, and later in all eleven of the Southern California News Group newspapers, which warns of an administrative nightmare unless California voters reject Prop 15. The assessors are from opposing political parties but agree that the split-roll measure will not fulfill its promises and be impossible to implement.

Read excerpts from “Costly split-roll initiative won’t deliver promised revenues below:

“However, when an initiative threatens the stability of our entire property tax system, we are compelled to speak out. We have joined the California Assessors’ Association in opposing the split-roll initiative on the Nov. 3 statewide ballot…

As a Democrat and Republican, we do not always agree on politics, but we strongly agree that this ballot initiative, as written, simply cannot be implemented by Jan. 1, 2022…

We have joined other assessors in concluding that the split-roll initiative, as written, would not be just challenging to implement, it would be impossible…

If initiative proponents seek to generate tax revenue to immediately “plug” local government budget shortfalls due to COVID-19, this measure would not do it. Nor should schools count on new revenue in 2022 for their budgets…

The proposition would not generate a net increase in revenue for many years, if at all, not months as promised. Meanwhile, it would create administrative chaos for property tax administrators…

An independent and impartial analysis prepared for the California Assessors’ Association concluded the implementation cost would reach $1 billion during the first three years, with no guarantee it would generate a fraction of the promised $12.5 billion in annual new property tax revenue…

In November, we hope voters seriously consider the costs and administrative challenges of the split-roll ballot measure and join us in voting no.”

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Largest Property Tax Increase In California History Lacks Accountability and Transparency

Nearly 70% of the $12.5 billion tax hike will fund government bureaucracy – not schools and communities

SACRAMENTO, CA – This November, Californians will vote on a proposition to increase property taxes for commercial and industrial properties by up to $12.5 billion a year. Either intentionally or by accident, the special interests behind the largest property tax increase in state history included virtually no accountability or transparency for California taxpayers. Instead, nearly 70 percent of the new tax dollars will go to the state and local governments without restrictions and with minimal reporting requirements. Even worse, the initiative fails to protect new local government tax revenue from being raided by Sacramento politicians – a situation that has become all too common in recent years.

“Despite the grand illusion presented by the initiative’s proponents, no protections exist to ensure a dime of these tax dollars is actually spent on helping lift our communities out of poverty,” said Alice Huffman, president of the California State Conference of the NAACP. “The measure’s lack of accountability allows state and local politicians to continue funding the same broken system.”

Because the tax hike is silent on how the new revenue must be spent, the proposition, unless defeated, is subject to the whims of politicians and powerful government bureaucrats. It leaves any new tax revenue wide open to be spent on things like expensive outside consultants, pay raises and generous benefits for bureaucrats, and projects for special interests. Additionally, the measure’s flimsy reporting requirements allow government agencies to evade or camouflage how they are actually spending new tax revenue.

“On top of $12.5 billion in higher taxes, the shocking lack of accountability adds insult to injury for California taxpayers. All Californians deserve to know where their money is being spent if they have to bear the burden of higher property taxes and a higher cost of living,” added Robert Gutierrez, president of the California Taxpayers Association.

Compounding the lack of accountability are loopholes that Sacramento politicians can exploit to divert money meant for local governments. The proposition gives the State Legislature the authority to manipulate how the new tax funds are distributed, which could allow the state to short-change local agencies.

“When making a decision, voters should ask themselves if they trust Sacramento politicians to keep their promises. Our city has seen the state raid local funds time and again. I have no doubt that history will repeat itself unless voters reject this flawed proposition,” said Pedro Aceituno, council member for the City of Bell Gardens.

Read more about the flaws in the $12.5 billion-a-year property tax hike here.

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ABOUT CALIFORNIANS TO SAVE PROP 13 AND STOP HIGHER PROPERTY TAXES
Californians to Save Prop 13 and Stop Higher Property Taxes, a bipartisan coalition of homeowners, taxpayers, and businesses, has been fighting to protect Prop 13 and oppose a split-roll property tax for more than a decade. For more information, please visit www.StopHigherPropertyTaxes.org.

Costly split-roll initiative won’t deliver promised revenues

When it comes to assessing homes or businesses, there is not a Democratic or Republican way.

County assessors fairly and equitably administer California’s complex property tax laws and regulations. We try to ignore the political consequences of our actions. Sometimes our assessments result in property tax increases. Other times, we lower property taxes to reflect declining real estate values.

As residents and taxpayers, we care about adequate funding for schools and local governments, as well as the adverse impacts higher taxes can have on businesses and residents. As property tax administrators, our duties require us to objectively oversee a complex system that involves tracking every parcel in our counties and ultimately leads to a property tax bill.

However, when an initiative threatens the stability of our entire property tax system, we are compelled to speak out. We have joined the California Assessors’ Association in opposing the split-roll initiative on the Nov. 3 statewide ballot, commonly referred to as the Schools and Communities First Initiative.

Largest Property Tax Increase In State History An Administrative Nightmare for Local Governments

Initiative’s complexities will cost taxpayers more than $1 billion to implement, could reduce tax revenue for small and rural counties

SACRAMENTO, CA – Today, the campaign opposing the $12.5 billion-a-year property tax hike qualified for the November ballot announced another serious flaw in the measure that will result in massive administrative costs and complexities for local governments. Unless defeated by voters, the proposition will require county governments statewide to radically increase appraisal staffing, training, and technology at a cost of $1.01 billion. A recent independent analysis prepared for the California Assessors Association (CAA) highlights how this increased staffing and expanded workload will create an administrative nightmare for local governments. The same study also indicated that significant costs for other county agencies, including auditors, controllers, and county counsel are not included – meaning administrative costs will be much higher than $1 billion. Finally, the study concludes that the proposition will cause some rural counties to lose property tax revenue rather than experience the gains claimed by special interests promoting the initiative.

The CAA, which represents the nonpartisan local officials responsible for administering the initiative, recently announced its opposition to the measure in large part due to its analysis of the high costs and complexities.

“The measure was drafted so poorly that it will cost taxpayers millions for Assessors to administer and lead to thousands of lawsuits due to the badly written language,” said Ernie Dronenburg, Assessor for San Diego County. “If passed, this measure will cause instability in the funding of local government and schools, which in turn will cause them to look for other tax increases and services to cut in order to compensate for the measure’s elimination of Proposition 13 funding predictability.”

The initiative specifies that administrative costs – which the CAA study estimates to be more than $1 billion for the initial three-year phase-in period – must be repaid first before any new tax revenue goes toward the initiative’s funding targets. The state’s nonpartisan Legislative Analyst reiterated this point in its analysis of the measure. Despite the initiative’s name, education funding is given the lowest priority for any new tax revenue.

“This initiative will significantly raise taxes on business properties and will take our hard-earned tax dollars and send them to larger, wealthier coastal counties,” said Marysville City Council Member Stephanie McKenzie. “The measure will also prioritize funding for administrative costs that will be required to implement this complex property tax increase. Marysville businesses and consumers who will be hit with higher prices simply cannot afford this ill-conceived tax measure.”

The initiative adds more “red tape” to an already complex property tax assessment structure. According to CAA’s new analysis, county assessors could see up to a 12-fold increase in annual reassessments. The study states, “A change in the law of such magnitude poses significant administrative problems for assessors and their local government partners in property tax administration, in addition to enormous start-up expenditures. There will also be additional compliance costs for taxpayers.”

The study also found, “The funding of additional property tax administrators would actually result in a net loss for many small counties.” Any revenue loss – or cost increase – to local governments comes at a horrible time, as many face budget cuts due to the COVID-19 economic crisis.

An earlier CAA analysis estimated that county assessors would need to hire up to 900 new auditors and appraisers statewide. Those positions require a high level of expertise and are already difficult to fill with qualified workers.

The measure includes a provision for the state to cover any startup and administrative costs for local governments, but the initiative’s language leaves it up to the State Legislature to determine by statute what costs will be covered and the repayment terms. This provision means the state can leave local governments on the hook for portions of the initiative’s massive administrative costs at a time when counties and cities are struggling with budget deficits. The start-up costs will begin immediately while new revenue—for the counties that receive any—will not be in full effect until 2025 according to the Legislative Analyst’s Office.

Read more about the flaws in the $12.5 billion-a-year property tax hike here.

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ABOUT CALIFORNIANS TO SAVE PROP 13 AND STOP HIGHER PROPERTY TAXES
Californians to Save Prop 13 and Stop Higher Property Taxes, a bipartisan coalition of homeowners, taxpayers, and businesses, has been fighting to protect Prop 13 and oppose a split-roll property tax for more than a decade. For more information, please visit www.StopHigherPropertyTaxes.org.

California Assessors’ Association Announces Opposition to Largest Property Tax Increase in State History

SACRAMENTO, CA – The California Assessors’ Association (CAA) announced today it has voted to oppose the $12.5 billion split-roll property tax that recently qualified for the November statewide ballot. County assessors are charged with implementing many of the proposition’s provisions. As the nonpartisan body representing the elected officials responsible for administering the initiative, the CAA announced its opposition and released a study citing serious concerns with whether the measure could actually be implemented. Because of its many flaws, the measure will not achieve its stated goals – and will result in a net revenue loss for some counties – according to the CAA.

“The implementation costs and administrative issues raised by our analysis have only become more problematic due to pending budget cuts and hiring freezes which are being implemented by counties across the State. Current local budgetary realities will make implementation of the initiative extremely difficult,” CAA President Don Gaekle, assessor for Stanislaus County, said in the group’s letter to the Assembly Revenue and Taxation and Local Government Committees ahead of today’s hearing on the measure.

“In my opinion, the property tax measure as written will be impossible for assessors to implement—not just difficult but impossible,” Santa Clara County Assessor Larry Stone said. “County assessors will be unable to recruit, train and deploy several hundred, qualified appraisers required to accurately assess complex commercial properties. The initiative will not deliver the promised revenue to schools and local governments. This is why the California Assessors’ Association representing all 58 county assessors oppose the initiative.”

The new independent analysis of the split-roll property tax published by the CAA predicted that the estimated cost to implement the measure is more than $1 billion during the three-year phase-in period. The independent analysis also predicted a 12-fold increase in reassessments and found “the funding of additional property tax administrators would actually result in a net loss for many small counties.” An earlier analysis by the CAA estimated county assessors would need to hire up to 900 new auditors and appraisers statewide.

Assessors already have trouble filling existing vacancies because there is a very small pool of people with the specialized skills needed to accurately assess property, assessors and others testified during several State Board of Equalization hearings held in recent months. The hiring and training of 900 new government workers could take years and could lead to salary “bidding wars” for the small number of qualified candidates, driving up costs and leaving smaller counties at a hiring disadvantage.

The burdens imposed on county assessors by the initiative could have a devastating impact on their existing services provided to homeowners and other taxpayers. “Homeowners would probably experience declines in service levels as assessors reallocate staff resources to focus on the new commercial valuation and assessment appeal responsibilities triggered by a split roll,” the independent analysis found.

“Administering this massive property tax increase will require an army of new government employees and doubling my office’s budget to fulfill the measure’s mandates with no guarantee that local governments will be made whole for these increased costs,” San Bernardino County Assessor-Recorder Bob Dutton said. “Implementing the property tax measure will cost as much as $26 million in administrative costs just for my county alone. That’s likely an underestimate because my analysis doesn’t factor the measure’s complex reassessments required for agricultural improvements and increased costs for assessment appeals.”

The proposition’s many flaws, including its impact on farmers, solar energy and small businesses, are described here.

Special Interests Qualify California’s Largest Property Tax Increase Amid Unprecedented Economic Challenges

SACRAMENTO, CA – Backers of the $12.5 billion-a-year property tax hike officially qualified their state proposition today for the November 3, 2020, ballot. Unless defeated by voters, the property tax increase will be the largest in California history. The special interests backing the state proposition pursued it despite a declining economy with more than three million Californians already out of work and most businesses closed. A bipartisan coalition of civil rights, social justice, business and community leaders is lining up to oppose the tax hike, citing concerns about a rising cost of living for families and an increased burden on small businesses already fighting to stay afloat.

“We need to get Californians back on their feet, not raise the cost of living even higher. The public employee unions behind the largest property tax increase in state history are willing to spend and do whatever it takes, even if it raises the cost of living for families. Everything from groceries, fuel, clothing, day care and health care will cost more if this massive tax hike is approved,” said Rob Lapsley, president of the California Business Roundtable.

“November’s property tax hike will hurt families and small businesses already struggling to make ends meet,” said Reverend Jonathan Moseley of Cedar Grove Baptist Church and president of the National Action Network LAX. “Our community cannot afford anything that raises the cost of living even higher, especially in light of the current COVID-19 crisis and an unpredictable economic recovery.”

In addition to raising the cost of living, the property tax hike includes critical flaws that will hurt all Californians. For example, the state proposition will hurt farmers with skyrocketing property taxes on the improvements needed to bring food from farm to fork – like barns, dairies, processing plants and even mature fruit trees – translating to higher costs for groceries for families.

“Under the November tax hike measure, California farmers could face higher property taxes -and families would face higher prices for food as the increase in taxes moves through processing, distribution and neighborhood grocery stores. Ultimately, the measure could lead to fewer California- grown food choices and higher costs for families,” added Jamie Johansson, president of the California Farm Bureau Federation.

Another flaw is the measure’s lack of protection for small businesses, who will see soaring rents ironically at a time when the federal and state government is trying to provide small businesses with rent relief to keep their doors open.

“Families and small businesses are looking at an uncertain economic future as the world’s fifth-largest economy skidded to a halt and must now re-start,” said Assembly Member Sharon Quirk-Silva (D-Orange County). “With all the insecurity that exists right now, we definitely don’t need to further complicate the situation by adding the state’s largest property tax increase ever to the equation.”

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Major Flaw in Massive Property Tax Hike Exposed – State’s Small Businesses Get Hammered by Measure’s Higher Taxes!!!

Half of all California Employees Work for a Small Business

SACRAMENTO, CA – A coalition of small business advocates across California exposed a major flaw in the state proposition likely headed to the November ballot that will raise property taxes by up to $12.5 billion annually. Contrary to claims by the measure’s proponents, small businesses are not excluded from the property tax hike. The proposition hikes taxes on most business properties in the state. The size of the business – large or small – owning or occupying the property is irrelevant. Because of how the initiative is drafted, businesses across California will face higher real property taxes and soaring rents, at a time when hundreds of thousands struggle to reopen their doors and ask state and federal governments for relief.

Furthermore, the proposition defines the term “small business” so narrowly that it is virtually impossible for any small business to qualify for their so-called “small business” personal property tax exemption. In reality, this “small business exemption” is an illusion. Almost all businesses, no matter the size, the value of the property, or the number of employees, will pay higher property taxes or higher rents, as owners pass on the high property taxes to their small business renters.

“This is a challenging time for small businesses. The $12.5 billion-a-year property tax hike added to an already historic COVID-19 recession will only make any reopening and, in some cases, survival that much more difficult,” said Betty Jo Toccoli, president of the California Small Business Association. “The so-called ‘small business exemption’ touted by special interests does not exist. Nothing in this measure protects small businesses from the burden of higher property taxes and increased rents.”

Numerous studies, including those by the NAACP California, Berkeley Research Group and Pepperdine University conclude that most small businesses do not own the property on which they operate. Instead, they rent and have what is called a “triple net lease,” where property owners pass along property taxes, insurance, and maintenance costs directly to the tenants. The proposition does nothing to prevent a building owner from passing on its property tax increase through a triple net or other form of lease to its small business tenants once the building is reassessed.

“There is hardly any protection for small businesses in this flawed proposition. If we want small businesses to have a future in California, voters must reject this massive property tax hike in November,” concluded Nathan Ahle, president and CEO of the Fresno Chamber of Commerce. “For mom and pop businesses in the Central Valley operating on slim margins, the measure will force rents to skyrocket…and could mean the difference between declaring bankruptcy or making payroll.”

“Read the fine print before casting ballots this November,” said Dennis Huang, executive director and CEO of the Asian Business Association of Los Angeles. “The proponent’s claims that small businesses will not be impacted by the $12.5 billion-a-year property tax hike is smoke and mirrors designed to fool voters. Study after study has shown that small businesses pay higher rents and costs when property taxes increase.”

Claim after claim made by proponents’ disputed:
During the last few months, backers of the measure, including the president of the California Teachers Association, have gone so far as to say that they “made sure that small businesses and farms would not be unfairly impacted.” In a stark rebuttal, organizations across California impacted by the tax measure’s broad reach have called into question the accuracy of the proponents’ claims. In February, the California Farm Bureau Federation announced its opposition to the measure as it would result in higher property taxes on the improvements needed to bring food from farm to fork, such as barns, dairies and processing plants.

Read more about the flaws in the $12.5 billion-a-year property tax hike here.