Split Tax role November 6, 2009

By
Commercial Real Estate Agent with Commercial MasterMinds

*** RED ALERT – SPLIT ROLL PROPERTY TAX INITIATIVES FILED ***

 

The following message is from Rex S. Hime, President & CEO, California Business Properties Association- reprinted with permission.

 

CBPA Board Members and Advisory Board Members

Affiliate Member Leadership (ICSC, BOMA, NAIOP, IREM, CDA, RILA, CCIM)

 

This is a Red-Alert to let you know that this past Friday, November 6,2009, the hammer finally dropped and two initiatives have been filed for Title and Summary with the Attorney General’s Office to change Proposition 13 and end tax protections for commercial real estate by enacting a Split Roll Property Tax. It is reported from multiple sources that the California Teachers Association (CTA) is the source for both of these measures.

These two initiatives join one other measure introduced last month, and come after successfully defending Proposition 13 in several different venues this past year, including legislative measures, in the state budget, and at the Tax Commission.

As we have discussed there several different approaches that can be taken to enact a split roll.  One of CTA’s measures increases all commercial taxes by .55%.  The other requires continuous reassessment and bases taxation on current value.

Both of CTA’s measures have political “sweeteners” thrown in like doubling the homeowners property tax exemption, doubling the renters tax exemption, and increasing the types of agricultural properties that are not subject to the commercial assessment.  One of the measures lists a whole bunch of benefits to education, meant not only as a way to fully control the monies to assure benefit for teachers, but also as rhetorical devices for the campaign (“vote for Prop X to increase class size reduction and improve school safety!”).

See below for highlights of the provisions and links to read the full measures.

 

Although this is the beginning of the official process, we are already taking actions to prepare for the battle, such as meeting with those responsible for writing the ballot analysis, analyzing the economics of the measures, formulating an opposition campaign, and fundraising.

In addition to these three measures, we are also expecting to see split roll measures from at least one public employee union and from the SF Assessor Phil Ting led group “Close the Loophole,” which was registered this year specifically to pursue a proposition.

These measures seek ways to allow California State Government to continue spending taxpayer dollars without addressing issues of overspending.

If you have any doubt about the negative impacts of a split roll, please see this study that examines the potential economic impacts by taking into account how a split roll would affect the behavior of individuals and businesses who own commercial property.   Click here to read the study entitled The Economic Effects of California Adopting a Split Roll Property Tax.

 

These are clear and present dangers to anyone that owns commercial property in this state and we ask that you help us with your talent or your treasure and/or at the very least that you help us make others aware of this oncoming attack and ask them to join us to stand against, and defeat these ill-conceived ideas.

 

Respectfully,

Rex

 

 

 

SUMMARIES OF MEASURES

 

 

CTA Measure 1:  EDUCATION AND TAXPAYER FAIRNESS ACT - Submitted to the CA Attorney General’s Office for Title and Summary on November 05, 2009.

ENACTS A SPLIT ROLL PROPERTY TAX

* By adding a new .55 percent ad valorem property tax (on top of existing 1% tax) to the “full cash value” of non-exempt non-residential property (commercial property).

 

To make the tax increase on businesses more palatable the measure also does the following:

* Doubles the homeowner property tax exemption from $7,000 to $14,000.

* Doubles the Renters’ Tax Exemption.

* Exempts first $1,000,000 of personal property tax to “protect small businesses.”

* Exempts property that is zoned and used for “agricultural production” (expands current ag exemption).

* Exempts all residential properties including multi-family.

* Money bypasses State’s General Fund and goes directly to “Public School Investment and Accountability Fund” for distribution to K-12 districts (78%), Community Colleges (11%), and CSU (11%).  University of California does not receive any funds.

* Funds are specifically directed to be spent on class size reduction, instructional supplies & equipment, school librarians/nurses/counselors, staff development for teachers designed by teachers, to provide for planning time for teachers, art/music/vocational programs, increased compensation for teachers, and school safety.

CTA Measure 2: PROTECT HOMEOWNERS AND CLOSE CORPORATE TAX LOOPHOLES ACT - Submitted to the CA Attorney General’s Office for Title and Summary on November 05, 2009.

 

ENACTS A SPLIT ROLL PROPERTY TAX

* By mandating an immediate reassessment of non-exempt non-residential property (commercial property).

* Mandates a reassessment of commercial property a least every three years.

* The “full cash value” becomes the new “fair market value.”

 

To make the tax increase on businesses more palatable the measure also does the following:

* Exempts property that is zoned and used for “agricultural production” (expands current ag exemption).

* Exempts first $1,000,000 of personal property tax to “protect small businesses.”

* Doubles the homeowner property tax exemption from $7,000 to $14,000.

* Doubles the Renters’ Tax Exemption.

* Gives counties cut of new tax revenue to pay for administrative costs of reassessments.

* Gives counties 10% of these tax revenues after assessment expenses.

* Revenue goes directly to state General Fund – does not direct how funds are spent.

 

 

PARCEL TAX

THE LOCAL VOTER CONTROL & GOVERNMENT ACCOUNTABILITY ACT - Submitted to the CA Attorney General’s Office for Title and Summary on October 09, 2009

 

ENACTS A SPLIT ROLL PROPERTY TAX

* By reducing from 2/3 vote requirement to 55% vote requirement the ability to increase certain local property taxes.

 

Your comments and feedback are appreciated. To learn more about my background, visit Consult Pete. To learn more about my company services, visit Commercial MasterMinds. I can be reached via email at Pete@CommercialMasterMinds.com or just call (925) 719-3569

Continued Success, Pete

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