Industry experts attending the annual ICSC Western Conference & Dealmaking discussed the threat posed by a split roll property tax measure that is on the November 2020 ballot in California.
The session was moderated by ICSC Vice President Herb Tyson and featured Matthew Klink (California Partners), Martha Miller (Platinum Advisors) and Alán Sneider (Primestor Development, Inc.).
Proponents of the referendum filed a new, revised proposal in August in an attempt to address concerns for small business owners. If enacted, the initiative could raise over $11 billion from commercial real estate.
According to reports, SEIU, the Teachers Union and other backers will need to collect nearly 1 million signatures by May 1 in order for the new initiative to qualify for the November 2020 ballot. The cost to secure the needed signatures is estimated at $10 million. If they succeed, supporters will pull the earlier version of split roll. If they fail to garner enough signatures then the previous measure remains on the ballot.
Specifically, the new language expands the reassessment exemption to small business owners with property valued at $3 million or less, up from the previous $2 million threshold. It provides a phase-in provision aimed at providing small business tenants with sufficient time to locate other rental options if they believe they will be affected by reassessment, organizers said. Klink, a leader in the coalition opposing split roll, noted that the overall impact of the alternate proposal remains destructive to commercial real estate and California property values.
Miller discussed the impact on retailers specifically, with both owned and leased properties and the disincentive to invest in California. She noted that California had both the highest cost of living and highest cost of doing business and that if split roll was approved, would only contribute to more costs for consumers and businesses alike.
Sneider focused on how developers and landlords across the state will lose certainty and stability in projecting tax liabilities and making investment decisions. The impact on underserved communities could be severe.
The overall consensus was that splitting residential and commercial property tax regimes will threaten California investments in commercial projects and ultimately residential property values.
For more information contact Herb Tyson at htyson@icsc.com.
L to r: Herb Tyson (ICSC), Matthew Klink (California Partners), Martha Miller (Platinum Advisors) and Alán Sneider (Primestor Development, Inc.).