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How Will These Propositions Affect Your Community?

Prop 15 – Amends Prop 13 – Opposed

This initiative targets commercial land and building properties, removing the protections engendered in Proposition 13 approved by voters in 1978. When purchased, a property is taxed at a rate of 1.1 percent and each year thereafter, the property tax can be increased at a rate of up to and no more than 2 percent. If approved by voters, starting in 2022-2025, and depending on the application of rules to certain properties, commercial properties valued at $3 million or more will be reassessed at current market value. This will be the single largest tax increase of its kind in California. Today’s high cost of land and buildings in this state will easily push many small and medium business properties beyond this threshold. If a property/business owner also holds interest in multiple properties with a combined value of $3 million or more, the properties are subject to reassessment at market value. Additionally, and importantly, many small and medium businesses rent or lease their space. There is little question that the increased property tax will be passed on to the tenant businesses. Aside from the obvious fact that proponents of Prop 15 appear to be tone-deaf and unsympathetic to the plight of the business community due to COVID-19 and its impacts, many of which are still not allowed to reopen, the timing and potential impacts to our businesses will further devastate the economy. The largest corporations, supposed targets of Prop 15, in all likelihood, are better positioned to absorb the increased cost and/or seek out tax friendlier states from which to operate. But even many of these large businesses are affected by the impacts of a reduced economy and the Public Health restrictions. Small and medium businesses will begin to disappear and could be replaced with large corporate-type businesses that can afford this increasingly costly real estate. The complexion of our Main Street-Downtown Districts would change. If approved, Prop 15 is expected to reap $6.5 – $11.5 billion per year in new funding designated for local government (60 percent) and education (40 percent). These entities provide important and crucial public services benefiting every segment of California. And as such, careful consideration of properly, effectively and responsibly funding our public services by every individual, property owner, and private and public entities that have a stake in this great state should help shoulder the costs. In this moment, specifically targeting a single sector of the economy to shore up funding to meet public service needs, is absolutely the wrong approach. The business community must be at the table with stakeholders to seek a thoughtful, comprehensive and effective approach to meet our expectations for a dynamic, inclusive and sound economic future.

Prop 21-Residential Rent Control – Oppose

This proposition amends state law to allow local governments to establish rent control on residential properties over 15 years old. Existing law (Costa-Hawkins Rental Housing Act) limits local rent control: excludes single-family homes; excludes housing built after 02/01/95; allows a landlord to set the amount of rent for a new renter. Early 2020, new state law limits rent increases for most rental housing, preventing landlords from increasing rent by more than 5 percent plus inflation or 10 percent, whichever is lower. It applies to most housing that is more than 15 years old and it expires in 2030. With 58 counties and nearly 482 incorporated cities, if approved, Prop 21 has the potential of creating a patchwork of more than 500 rent control ordinances, constraining the rental market and further exacerbating the residential housing market, especially for entry-level workers, seniors, low income individuals, retirees, and for unsheltered individuals transitioning to permanent housing. The unpredictability of affordable housing options will drive workers further from their workplace, increasing the untenable pressure already being experienced throughout California, and more so in major metropolitan areas such as the 9-county San Francisco Bay Area region where housing supply is insufficient for the demand. It is the responsibility of jurisdictions that currently retain local control over land use planning and implementation to meet their obligations to approve new residential construction to support growth in its jobs and population. Approving and increasing the number of housing options, matching the local demand, will minimize the need for rent control.