Voters to Consider Initiatives That Could Dramatically Change State's Commercial Property Industry
By Randyl Drummer CoStar News July 2, 2020 | 6:31 P.M.
California election officials assigned numbers to a dozen statewide initiatives on the November ballot, including the high-profile property tax and rent control measures that are vehemently opposed by the commercial real estate industry and other business groups.
Secretary of State Alex Padilla this week presented the newly numbered rent control and split-roll property tax propositions along with six other initiatives that qualified for the Nov. 3 ballot through the collection of voter signatures. Four initiatives that propose state constitutional amendments that were approved in June by the State Legislature are also scheduled to be on the ballot.
The 12 measures range from initiatives that would allow voting by parolees and some 17-year-olds to a proposition that would reinstate affirmative action in California for the first time in 24 years by repealing Proposition 209, an initiative passed by voters in 1996 that prohibits state agencies and universities from awarding government contracts or admitting students to colleges and universities on the basis of race, gender or ethnicity.
Commercial and residential landlords and other real estate and business groups, including the California Business Properties Association, California Chamber of Commerce and the California Business Roundtable, have vowed to spend millions of dollars to defeat two measures they say will harm the economy and drive more companies out of California, already one of the most expensive states in the country to live and operate a business.
Election officials provided that Proposition 15 would be the name for the measure to revise California’s landmark property tax law created in 1978 by Proposition 13. The measure would allow for higher property taxes on commercial properties while keeping existing tax rules in place for single-family homes, multifamily properties, standalone businesses and agricultural land.
Initiative sponsor Schools & Communities First, an umbrella group that includes teachers, labor unions and community groups, said Proposition 15 is expected to raise more than $12 billion a year for schools and local governments starting in 2022.
“Even before this recent crisis, our schools were struggling," said California Teachers Federation President Jeff Freitas during a Schools & Communities First presentation Friday featuring top California education and teachers union leaders, including state Education Superintendent Tony Thurmond.
Freitas and others urged voters to pass Proposition 15, which officially qualified for the state ballot in May.
"We live in a state that’s the fifth largest economy in the world, yet we are 44th in per-pupil spending in America in the K-12 system,” Freitas said. "It's critical that we pass this measure."
Jon Coupal of the Howard Jarvis Taxpayers Association, a group named for the businessman that led the historic passage of Prop. 13 in 1978, said that the measure raising property taxes on businesses is just the first step in the complete dismantling of the 42-year-old measure, which is often described as the "holy grail" of California politics. "Even if we resolve the health issues related to the COVID-19 pandemic, higher taxes are the last thing California needs," Coupal said in a statement. "The state already has the highest income tax rate, highest state sales tax, and highest fuel tax."
The statewide rent control measure was dubbed Proposition 21. It has been called the Rental Affordability Act by proponent Los Angeles activist Michael Weinstein. It qualified for the November ballot in February.
The measure, championed by minority-advocacy groups, tenants' rights advocates and other organizations that support affordable housing, is the second attempt in two years by Weinstein and his AIDS Healthcare Foundation to strengthen statewide rent control. Voters in 2018 overwhelmingly rejected Weinstein’s Proposition 10, which would have repealed the state Costa-Hawkins Rental Housing Act passed in 1995 that limits local governments from creating their own rent control ordinances.
The new ballot measure would modify rather than rescind the Costa-Hawkins law, allowing cities to apply rent control to all housing more than 15 years old, with the exception of property owners that rent out two or fewer homes. If passed, the measure would supersede any local rent control ordinances.
Padilla invited groups to submit arguments to be considered for inclusion in the state's official voter information guide, which is mailed to every voting household in the state, according to a statement. The Secretary of State's Office displays arguments selected for the guide on its website between July 21 and Aug.10, with first priority given to arguments written by legislators and to proponents of the initiative or referendum.
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