UPDATE - January 29, 2016
A proposition to change Proposition 13 in a manner that would allow an almost doubling of state property tax is currently out for signatures and seems to be gaining momentum. This is a threat that we are taking very seriously and putting out a call to our industry to get educated, active, and engaged to prepare to defend against this huge tax increase.
The property tax initiative known by proponents as Lifting Children and Families Out of Poverty Act is referred to in shorthand as the Collis initiative after one of its primary advocates, former State Board of Equalization Member Conway Collis.
The measure would undo Prop. 13 by creating a property tax surcharge on all properties in the state (commercial and residential) assessed at more than $3 million. The increased taxes generated are then directed to fund poverty reduction programs.
As of last week, the initiative had over 25% of the signatures needed to qualify for the ballot. Advocates have until March 21, 2016, to collect the required 585,407 signatures.
According to a CalTax review, the 47-page initiative does not differentiate between commercial and residential properties. It refers to the property tax hike as “a surcharge not to exceed 1 percent of the full cash value of real property in excess of $3 million,” and says the “surcharge shall not be considered … a higher tax or new ad valorem tax on real property ….”
The surcharge, commencing with the 2017-18 fiscal year, would be an additional 0.3 percent tax on the portion of assessed value between $3 million and $5 million; 0.6 percent on the value between $5 million and $10 million; and 0.8 percent on the value in excess of $10 million.
This is a very real threat to increase property taxes on all of your properties in this state and we are working to mobilize all of our members to help fund efforts to defeat this threat. If you own property you should get engaged. If you manage property you should make sure the owners of your property are aware and encourage them to get engaged. If you rent property you should get engaged before your lease costs increase.
Email johnb@boma.com and kenc@boma.com for more information.
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UPDATE - June 11, 2015
On June 10th, Senate Constitutional Amendment 5 - a split roll property tax measure - was introduced.
With a two-thirds vote of the Legislature, SCA 5 would to amend the California State Constitution to allow for regular reassessments of commercial and industrial property to their fair market value, starting with the 2018-19 fiscal year. However, the constitutionally mandated 1 percent tax rate would be retained, and Proposition 13 protections would continue to apply to residential rental property and agricultural property.
The measure would also provide for a five-year phase-in of regular fair market value reassessments for certain commercial and industrial property owners; and exempt from personal property taxes $500,000 of tangible personal property used for business purposes, beginning January 1, 2019.
If approved by two-thirds of the California State Legislature, the measure would be placed on the November 2016 ballot. The Governor’s signature is not required.
BOMA California members are coordinating with Californians to Stop Higher Property Taxes and allied groups such as the California Chamber, CalTax, and Howard Jarvis, to respond to this attempt to amend Proposition 13, through news media, social media, and direct contact with legislators.
Regardless of what you may see or hear from the media, please know that BOMA California is pushing back. Click here for materials that can help you respond locally should you engage with the press or local opinion leaders.
Click here for the text of the split roll property tax measure SCA 5 (Mitchell & Hancock).
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UPDATE - May 12, 2015
A new effort to change Proposition 13 protections for commercial real estate has manifested.
Indeed, a group has formed to engender public opinion in support of changing Proposition 13 to include split roll and advance legislative efforts to introduce a bill in the California State Legislature to change existing property tax law. As leaders of the commercial real estate industry in California, please remain vigilant and conversant about the issue to help counter the political hyperbole.
Sign-up for updates from Californians to Stop Higher Property Taxes - a BOMA California partner organization, to stay appraised of the latest news.
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Original Post - May 16, 2014 |
| L to R: Asm. Ammiano; Asm. Bocanegra |
Over the years, a few complex property purchase deals have given the appearance of an attempt to avert the Proposition 13 change of ownership rules. The transactions have been highlighted and used to commove the reform proponents of the property tax law. This current agreement between stakeholders is meant to update some of the laws implementing statutes to address this viewpoint.
Currently, a property is reassessed when it is sold and/or changes ownership. However, if none of the purchasers acquires more than a 50% interest, reassessment may not necessarily be triggered. AB 2372 will be amended to clarify that as long as 90% of a property is sold, a reassessment would be triggered, regardless of whether any individual buys more than 50% of the property. Safeguards are being negotiated by your BOMA California advocates in Sacramento now to clarify that the change of ownership amendments do not apply to normal turnover of stock for publicly traded companies.
As our organizations have done in the past, BOMA San Francisco and BOMA California will continue to defend Proposition 13 - an initiative that protects both residential and commercial properties. However, part of an effective defense of the property tax law is to recognize that the intent of the original language may need to be updated to assure the voter approved goals of the initiative are being met. BOMA believes this agreement does just that.
Split Roll Measures Still Loom
For 2014, various members of the California State Legislature continue to pursue public policies that would undermine the intent of the property tax protections approved by voters under Proposition 13. Indeed, there are upwards of nine California Constitutional Amendments seeking to lower voter thresholds to amend the initiative's tax protection on properties from 2/3rds (66.66%) to 55%.
Rest assured that your fellow BOMA California members are working hard to protect the industry's interest. Stay tuned for updates in future blog posts.
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