Recap of the Zoom-In Webinar: How Will Prop 15 Impact California Commercial Real Estate
NAIOP SFBA hosted an extremely important Zoom-In Webinar: How Will Prop 15 Impact California Commercial Real Estate, on Thursday, September 17th. The program featured Rex Hime, President and CEO of the California Business Properties Association (CBPA) which provides legislative advocacy for NAIOP in Sacramento. Hime explained the impact of Prop 15 which, if passed, will remove Prop 13’s property tax protection and will result in the largest property tax increase in history. He also provided an update on the work of the No On Prop 15 Campaign, a diverse bi-partisan coalition, and urged NAIOP members to get involved, NoOnProp15.org.
No On Prop 15 Campaign Update
- Raised close to $60M of the budgeted $75M
- Began TV, radio and social media campaigns
- Legislative Analyst came out predicting measure would create loss of 85K – 130K jobs
- Recent polling showed drop for Yes Campaign from 53% to 51%
- Believes they can get the polling down to 44%
- Measure needs “simple majority” to pass, 50% plus 1 to pass
- Important to crush by high percentage to prevent it from returning for a decade or longer
What does the No On Prop 15 Campaign look like? Where is the money going?
- Spending approx. $7M per week
- Minimum 1K gross rating points for radio and TV (high viewer/listener spots)
- Focused on San Diego, Orange County, LA, Central Valley and minimal in Bay Area
- Bay Area voters harder to persuade / going after voters they can influence
- Two TV ads currently running
- Radio campaign complimented by Farm Bureau and Howard Jarvis Tax Payers Assn
- Targeting ethnic publications
- Yard signs (Howard Jarvis Assn)
- Direct mail planned starting in two weeks
Who is behind the Yes Campaign? What are they doing?
- California Teachers Association (CTA) – largest donor and driver
- Chan Zuckerberg Foundation – second largest donor ($7M donated)
- Service Employees International Union (SEIU) – third largest donor
- Goal is to spend $50M – funds mostly coming from union dues
- Spent close to $20M to get measure on ballot
- Running TV ads
What exactly is being reassessed?
- Any vacant land that is zoned commercial
- Agricultural land with packing or processing plants, equipment yards, orchards, vineyards
Do assessors have the financial and technical expertise to appraise properties? Do counties have the personnel to implement it? Have they taken a position on it?
- There are almost 650K commercial properties in CA
- The CA County Assessors Assn has come out in opposition (Including Larry Stone in Santa Clara County who is known to be an arch foe of Prop 13)
- Would cost them $1B to get set up and $4-500M each year to implement
- Would require thousands more assessors to be hired
- Anticipate high volume of challenges and appeals as tax payers receive new values
If it passes is there a game plan for implementation? When will property owners have to start budgeting for it?
- Would go into effect Jan 2023
- New reassessments sent out in 2023 / money will come in during 2024
- Assessors will start reassessing immediately
- Currently unclear if they will back check for last two years prior to reassessment
Does CBPA have a stance on a better form of tax?
- CBPA has been on the team that has passed every statewide school construction bond since 1980
- Brought in approx $50B
- CA spends 43% of its budget on K-12 education
- Prop 15 does nothing to help education, nothing more to back fill deficit pensions
How much revenue does Yes Campaign estimate? Where the money will go?
- The campaign estimates $7-12B
- 60% goes to local government
- 40% goes to schools
- Undefined as to how the money gets used
- Assessors get reimbursed for their costs
Is there an exemption for small business?
- There is no exemption – just a delay
- Landlords with 50% small businesses leases would get a delay
- Landlords would have to validate with documentation
- Reassessment would occur in 2025
What is the impact of the Governor’s endorsement?
- No significant impact
In the past have you been aligned with so many Democrats to defeat a measure?
- No, this is the first time
- Prominent Democrats who have come out in opposition include:
- Former Mayor Willie Brown
- Former Mayor of LA Antonio Villaraigosa
- Former Chair of the Democratic Party
- 14 Former Democratic Legislators
- Handful of Current Democratic Legislators
- See full list of individuals and organizations on NoOnProp15 website (link below)
Given it is a Presidential Election year, how do you think turn out will be impacted and how to you think it will impact this campaign?
- Expects turnout to be largest ever at 80% plus
- Have based strategy around that high percentage
- Readjusted campaign to include more direct mail given that it will be mail In ballots
Where can members go to get more information, get campaign materials and donate?
Click here to access a tool that helps landlords calculate potential reassessments
