California Proposition 13 Garnering Some Support Amid Pandemic

On May 12, 2020, the Public Policy Institute of California’s latest Split Roll poll shows gaining support of registered voters (54%). Additionally, Split Roll 2.0, a modified version of the already qualified Split Roll 1.0, gathered 1.7 million signatures of which about 997,000 must be validated to make the November 2020 ballot. If validated, it will likely replace version 1.0. The differences between the versions primarily relate to thresholds at which small business-owned properties would continue to be taxed under Proposition 13. Both versions amend the state constitution to value commercial and industrial properties (except residential/agricultural properties) at market value, every three years. The reassessment could eventually be on an annual basis after the phase-in period.

The Schools & Communities First, Split Roll campaign, held a press conference on May 8 and issued a press release on May 11 to emphasize a report that details the amount of new tax revenue from the initiative that would be allocated to cities, school districts, and other entities in various counties. The report did not address the job decrease the initiative would have or the increased living costs for residents. Numerous public officials, including San Francisco Mayor London Breed, Stockton Mayor Michael Tubbs, Santa Clara County Supervisor Cindy Chavez, Los Angeles County Supervisor Sheila Kuehl, and Huron Mayor Rey Leon, all came out in support of the initiative after the report was issued. COVID-19 has had a tremendous impact on the support of this ballot measure, and the concern is that as a result of the virus and the economic impacts to the state, the measure will receive continued and increased support.

However, in reaction to the press conference, the California Taxpayers Association (“CalTax”) cautioned that “[i]f sponsors . . . are wise, they will pull the measure out of November . . . [and] it is likely doomed.” CalTax questions whether the pandemic may decrease property values for commercial property. In addition, the economic impact of COVID-19 on the property leases and owners may be catastrophic, eliminating their ability to pay any increases in property tax.

Previously, the Split Roll initiative drew national attention with endorsements from presidential candidate Joe Biden and California State Senator Kamala Harris as well as the Service Employees International Union of California and the California Teachers Association, frequent supporters of many overreaching tax initiatives. 

Opponents include the California Business Roundtable, CalTax, California Farm Bureau Federation, and California NAACP, voicing opposition based on the challenges it creates for minority-owned small businesses. The Howard Jarvis Taxpayers Association has been telling homeowners that any attempt to take apart Proposition 13 may have a detrimental effect to their rights under Proposition 13. 

Now, on May 20, 2020, CalTax reported that the campaign against the Split Roll initiative, Californians to Save Prop 13 and Stop Higher Property Taxes, issued tweets over the last week featuring mayors and council members from around the state citing the increases in tax would not be able to be paid in the current economic crisis. CalTax notes that “Trump loyalists, massive corporations & special interests are bankrolling the opposition to Schools & Communities First!”

This is a very important issue that we will continue to monitor, as it could greatly affect commercial property owners in California.

TECHNICAL INFORMATION CONTACTS:

Susan Orloff
Principal
Ryan
213.627.1719
susan.orloff@ryan.com

Mike Brennan
Director
Ryan
442.244.2414
mike.brennan@ryan.com

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