Big money battles Prop. 15
Millionaires versus Markets:
The corporate owner of Terranea Resort has spent $250,000 to defeat Proposition 15, while Carson’s largest landowner, the Watson Land Corp., has spent $99,000. Terranea is used to getting its way: It bullied Rancho Palos Verdes into giving it an $8.2 million rebate when it opened in 2009 and later partnered with Donald Trump, who was once a principal shareholder in New York-based Vornado Realty Trust, an S&P 500 company that has also spent $250,000 to defeat Prop 15.
The reason is obvious: Prop. 15 would tax commercial and industrial properties based on current market value, rather than decades-old purchase prices, raising an estimated $6.5 billion to $11.5 billion annually for K-12 schools and community colleges, counties,
[Prop. 15,
cities and special districts, according to the Legislative Analyst’s Office. And, 92% of that money would come from the top 10% of commercial properties, according to a property tax roll analysis by Blue Sky Consulting in July. In other words, it would come from folks like Terranea, Watson and Vornado.
“This is a choice between perpetuating a tax break for the wealthiest corporations in our state or expanding the critical local services to reduce homelessness, reduce emergency wait times and improve our neighborhoods — at zero cost to residents,” Los Angeles Mayor Eric Garcetti said earlier this year.
A recent deceptive No On Prop 15 TV ad portrays a black family barber shop as the prime target of Prop. 15, with the added ominous warning that “they admit homeowners are next,” but the ad flies directly in the face of the facts.
The proposition exempts properties worth less than $3 million — except for owners whose total holdings exceed that threshold — and has other provisions protecting small businesses: “Prop. 15 would not affect the assessment of residential property (including owner-occupied homes and residential rental property) or property used for commercial agricultural production,” according to an analysis by the California Budget and Policy Center. “The measure would also create new exemptions for business personal property (such as equipment, furnishings and supplies): small businesses would be able to exempt all of their business personal property from taxation, and other business taxpayers would be able to exempt the first $500,000 in business personal property.”
In short, Prop. 15 bends over backwards to ensure that it’s not a broad tax increase, but rather narrowly targets those who’ve long gotten by paying far less than their fair share. But that hasn’t stopped Prop. 15’s opponents from trying to argue the opposite. On Aug. 5, Superior Court Judge James P. Arguelles ruled that a key paragraph of the voter guide arguments against Prop. 15 — claiming that it could lead to higher taxes for homeowners — be removed as “misleading if not outright false.”
TV.But courts can do nothing about lies on
“Our worst recession isn’t the time for the biggest property tax hike ever,” the barbershop ad concludes.
But taxes won’t go up for years — and
passing them onto tenants is a whole other story.
“This change would be phased in over several years, beginning in 2022-23, following a process established by the Legislature,” the California Budget and Policy Center report explained. “If at least 50% of a property (determined by square footage) is occupied by small businesses, the property would not be assessed until 2025-26 at the earliest.”
Beyond that, California Budget and Policy Center policy analyst Kayla Kitson told Random Lengths, “Prop. 15 includes a series of provisions that would protect many small businesses from property tax increases while also providing them with new property tax cuts.” For example, “The measure would create a new tax exemption for personal property, which will result in overall tax cuts for many small businesses,” exactly the opposite of what the ad threatens.
More broadly, “We think it’s important that Californians understand what Prop. 15 would do,” Kitson said. “Why focus on commercial and industrial properties only? This is because a small portion of the commercial and industrial properties in California are very valuable but have not been reassessed in decades, so their assessed values under current law are much lower than their market values. And this has created inequities between taxpayers and resulted in significant lost revenue for local services for people across California communities.”
The mysterious “they” who “admit homeowners are next” could not be reached for comment. Because, alas, “they” do not exist.
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