News

Prop. 13 reform could be big boost to county's tax revenue, study says

Proposal could generate between $10.3 billion to $12.6 billion in additional tax revenues statewide

Alma Village in Palo Alto. This November, voters will decide on Prop. 15, which seeks to assess property taxes by commercial and industrial property at market value. Embarcadero Media file photo by Veronica Weber.

One of the major ballot initiatives facing voters in November will be the Schools and Communities First initiative.

It proposes to change how property taxes are assessed for commercial properties, the first change since Proposition 13 passed in 1978. Currently, a property's value is only reassessed when it is sold and when there's new construction on an existing site. After it changes hands, the increase in the assessed value is capped at 2% per year.

Instead, the initiative would assess commercial and industrial property at market value, regardless of the last date of sale. Residential properties and commercial agriculture properties would continue under the current assessment system.

Last week, the Menlo Park Housing Commission voted 6-1 to recommend that the City Council direct staff to analyze the initiative to see how it might impact housing development, the city's general fund and small businesses, according to Rhonda Coffman, deputy community development director in Menlo Park.

The initiative could generate more tax revenue per capita in San Mateo County than any other county in the state, according to a study by the USC Dornsife Program for Environmental and Regional Equity.

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The study was published in February; since then, a revised version of what is now Proposition 15 qualified for the ballot, which stipulates that the switch to using market rate assessments wouldn't take effect until the 2022-23 fiscal year, and until 2025-26 for some properties like retail centers occupied by a majority of small businesses.

Despite the study's dated assumption that the initiative would take effect by the 2021-22 fiscal year, it singles out San Mateo County as the county that would likely generate the greatest increase in additional property tax revenue per capita in the state. If the initiative were to take effect in 2021-22, the county would likely generate around $1,008 per capita in additional property tax revenue, and a total of between $709.4 million and $833.7 million, the study's authors report.

Santa Clara County is projected to generate about $637 per capita during the same fiscal year, at a total of between $1.1 billion and $1.3 billion, they reported.

It also estimated that the proposed reform could generate between $10.3 billion to $12.6 billion in additional tax revenues statewide in the same fiscal year.

While the USC study assumes some slowdown in market growth and assessed values, and its findings seem "generally accurate," it was published before the pandemic, county Assessor Mark Church said in an email. The coronavirus has accelerated the trends of teleworking, business travel and retail, and it's not clear how those impacts will affect property valuations in the future, he said.

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A bigger question, he said, is how those funds will be distributed. Just because they might be generated in San Mateo County doesn't mean they will be spent there. The state's formulas for distributing funds dictate that the largest share of property tax revenue goes to Sacramento and is spent according to complex state distribution formulas, Church said.

Counties and commercial properties would be disparately impacted by the initiative, the study reports.

While San Mateo County stands to earn $1,008 per resident in the 2021-22 fiscal year, the rural Tuolumne County stands to generate only about $29 per capita.

The initiative would also impact higher-valued properties more than lower-valued ones, the report said. From commercial properties valued at over $5 million, which represent only about 6% of all commercial properties, the state is estimated to generate about 78% of the revenue gains. Only 1% of the estimated increase in statewide revenue would come from the 61% of commercial properties valued at less than $250,000, according to the report.

But implementing the initiative would also create new costs, assessors say. For decades, California, unlike other states, has not required assessors to regularly evaluate the market value of all commercial properties, and creating the capacity to do so would require staffing up and expanding training.

An independent review by Capitol Matrix Consultants found that, if the initiative passes, it could cost California counties an additional $380 million to $470 million annually during the first five to 10 years and require the creation of 900 new positions statewide.

Church said that his office is still analyzing the administrative burdens of the initiative, since it would create additional work for the assessor's office, roughly quadrupling the number of properties it currently assesses per year to about 4,600 annually from roughly 1,100 per year. This would require the county to hire more senior appraisers and staff members, and senior appraisers are hard to find in the current job market, he said.

For Santa Clara County, that number would increase about twelvefold, according to a white paper report by the California Assessors' Association.

Among the top donors to the committee supporting the November proposition are the California Teachers Association, the SEIU California State Council and the Chan Zuckerberg Initiative's advocacy arm.

Kate Bradshaw writes for The Almanac, the sister publication of PaloAltoOnline.com.

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Prop. 13 reform could be big boost to county's tax revenue, study says

Proposal could generate between $10.3 billion to $12.6 billion in additional tax revenues statewide

by / Almanac

Uploaded: Sun, Jul 12, 2020, 8:20 am

One of the major ballot initiatives facing voters in November will be the Schools and Communities First initiative.

It proposes to change how property taxes are assessed for commercial properties, the first change since Proposition 13 passed in 1978. Currently, a property's value is only reassessed when it is sold and when there's new construction on an existing site. After it changes hands, the increase in the assessed value is capped at 2% per year.

Instead, the initiative would assess commercial and industrial property at market value, regardless of the last date of sale. Residential properties and commercial agriculture properties would continue under the current assessment system.

Last week, the Menlo Park Housing Commission voted 6-1 to recommend that the City Council direct staff to analyze the initiative to see how it might impact housing development, the city's general fund and small businesses, according to Rhonda Coffman, deputy community development director in Menlo Park.

The initiative could generate more tax revenue per capita in San Mateo County than any other county in the state, according to a study by the USC Dornsife Program for Environmental and Regional Equity.

The study was published in February; since then, a revised version of what is now Proposition 15 qualified for the ballot, which stipulates that the switch to using market rate assessments wouldn't take effect until the 2022-23 fiscal year, and until 2025-26 for some properties like retail centers occupied by a majority of small businesses.

Despite the study's dated assumption that the initiative would take effect by the 2021-22 fiscal year, it singles out San Mateo County as the county that would likely generate the greatest increase in additional property tax revenue per capita in the state. If the initiative were to take effect in 2021-22, the county would likely generate around $1,008 per capita in additional property tax revenue, and a total of between $709.4 million and $833.7 million, the study's authors report.

Santa Clara County is projected to generate about $637 per capita during the same fiscal year, at a total of between $1.1 billion and $1.3 billion, they reported.

It also estimated that the proposed reform could generate between $10.3 billion to $12.6 billion in additional tax revenues statewide in the same fiscal year.

While the USC study assumes some slowdown in market growth and assessed values, and its findings seem "generally accurate," it was published before the pandemic, county Assessor Mark Church said in an email. The coronavirus has accelerated the trends of teleworking, business travel and retail, and it's not clear how those impacts will affect property valuations in the future, he said.

A bigger question, he said, is how those funds will be distributed. Just because they might be generated in San Mateo County doesn't mean they will be spent there. The state's formulas for distributing funds dictate that the largest share of property tax revenue goes to Sacramento and is spent according to complex state distribution formulas, Church said.

Counties and commercial properties would be disparately impacted by the initiative, the study reports.

While San Mateo County stands to earn $1,008 per resident in the 2021-22 fiscal year, the rural Tuolumne County stands to generate only about $29 per capita.

The initiative would also impact higher-valued properties more than lower-valued ones, the report said. From commercial properties valued at over $5 million, which represent only about 6% of all commercial properties, the state is estimated to generate about 78% of the revenue gains. Only 1% of the estimated increase in statewide revenue would come from the 61% of commercial properties valued at less than $250,000, according to the report.

But implementing the initiative would also create new costs, assessors say. For decades, California, unlike other states, has not required assessors to regularly evaluate the market value of all commercial properties, and creating the capacity to do so would require staffing up and expanding training.

An independent review by Capitol Matrix Consultants found that, if the initiative passes, it could cost California counties an additional $380 million to $470 million annually during the first five to 10 years and require the creation of 900 new positions statewide.

Church said that his office is still analyzing the administrative burdens of the initiative, since it would create additional work for the assessor's office, roughly quadrupling the number of properties it currently assesses per year to about 4,600 annually from roughly 1,100 per year. This would require the county to hire more senior appraisers and staff members, and senior appraisers are hard to find in the current job market, he said.

For Santa Clara County, that number would increase about twelvefold, according to a white paper report by the California Assessors' Association.

Among the top donors to the committee supporting the November proposition are the California Teachers Association, the SEIU California State Council and the Chan Zuckerberg Initiative's advocacy arm.

Kate Bradshaw writes for The Almanac, the sister publication of PaloAltoOnline.com.

Comments

common sense
Midtown
on Jul 12, 2020 at 8:44 am
common sense, Midtown
on Jul 12, 2020 at 8:44 am
25 people like this

The reporter's wording choice is poor:

"While San Mateo County stands to earn $1,008 per resident in the 2021-22 fiscal year, the rural Tuolumne County stands to generate only about $29 per capita."

She did not read the ballot measure, as the ballot measures says that any additional revenue gets sent to the state for redistribution; many of the school districts in San Mateo & Santa Clara counties are basic aid districts, so those districts won't see much of the money that gets redistributed; and the government isn't "earning" the money, it's raising taxes.

The reporter did not read the USC study; the current law states that properties can have their property tax assessment change when a property changes ownership or when their is new construction. The study did not take into account how new construction would affect how they arrived at the multipliers that they used for calculating value of properties that haven't changed ownership recently, but may have had construction.

The USC study was done before the pandemic, and we know retail, hotels, travel have all taken big reductions, and the continued use of teleworking will mean those properties types will see a reduction of value.


Anon
Another Palo Alto neighborhood
on Jul 12, 2020 at 9:39 am
Anon, Another Palo Alto neighborhood
on Jul 12, 2020 at 9:39 am
7 people like this

I'm pretty frustrated by this measure, and also, the proposed "implementation". To hear proponents talk, you would think money grows on trees.

Prop 13 was and is very, very unfair, but, this should have been phased in with Phase 0 being revenue-neutral. All this talk about how they going to spend all the free money is very misguided, and plays right into the opponents narrative.


Nayeli
Midtown
on Jul 12, 2020 at 9:49 am
Nayeli, Midtown
on Jul 12, 2020 at 9:49 am
49 people like this

TRANSLATION: Prop 13 reform will result in the government collecting more money from everyone to spend on whatever politicians want.


Kathy
Greater Miranda
on Jul 12, 2020 at 9:58 am
Kathy, Greater Miranda
on Jul 12, 2020 at 9:58 am
38 people like this

And why would we want to increase tax revenue? To hire more unionized public employees and/or to better compensate those already hired - those w the unfunded pension liabilities strangling our cities and counties and state? Californians are already very heavily taxed, highest in the nation for state personal income taxes. Look at the results - while collections from our property taxes and other taxes have increased significantly over the last decade, our CA public schools continue to produce very poor academic outcomes (check the Caaspp state test results for the state of CA). Accountability and results are what's missing, from all forms of government agency employees, and particularly our public schools' teacher's union members who would benefit from this measure. Remember the story about the CA DMV employee who slept half the workday away for years and finally a complaint was made? She kept her job at the DMV. Do we want to pay these folks more and give them a richer pension for sleeping on the job? Collecting more tax revenue just compounds that problem. Fresh business taxes will just be passed on to us, the consumers, and the cost of living here is already very high.


Family Friendly
Old Palo Alto
on Jul 12, 2020 at 10:08 am
Family Friendly, Old Palo Alto
on Jul 12, 2020 at 10:08 am
25 people like this

This will result in a massive wave of gentrification in the Bay Area. Many people in such places as East Palo Alto are sitting on valuable land which they’ll never be able to pay the annual taxes for.

No matter. There will plenty of space on the empty, tax-subsidizes, (not-so-)high speed rail trains in the Central Valley for them to sleep in.


Anon
Another Palo Alto neighborhood
on Jul 12, 2020 at 10:28 am
Anon, Another Palo Alto neighborhood
on Jul 12, 2020 at 10:28 am
7 people like this

Posted by Family Friendly, a resident of Old Palo Alto

>> This will result in a massive wave of gentrification in the Bay Area. Many people in such places as East Palo Alto are sitting on valuable land which they’ll never be able to pay the annual taxes for.

Note that your personal residence is excluded. It is commercial real estate. It would apply to that valuable land under a privately-owned marginal small business, however, so, it could accelerate the destruction of small businesses.

However, another thing I would like to point out is that we are already suffering a massive wave of hyper-gentrification, in spite of Prop 13. Why? One reason is that the so-called "superstar firms" Web Link which began here, e.g., Apple, Cisco, Google, Facebook, Twitter, etc., are still centralized right here, and, many of them have been planning on staying centralized right here. The explanation for that seems to be psychological. Certainly, it isn't cost-driven: many employees would love to be able to live in a less-expensive location.


Rebecca Eisenberg
Old Palo Alto
on Jul 12, 2020 at 10:46 am
Rebecca Eisenberg, Old Palo Alto
on Jul 12, 2020 at 10:46 am
23 people like this

Hi everyone! I have been a part of the majority of Californians pushing for this measure for years. I would be happy to discuss the details of Prop 15 with you, and why exactly we need Prop 15 to ensure fairness and to invest in our communities. It does not create new taxes - rather, it closes tax loopholes for our largest businesses and real estate developers, who pay the lowest effective property tax in the world, sometimes currently a tax rate that is virtually zero.

A couple brief responses to the comments above:

- The measure does not send "extra money to the state for redistribution." Rather, it follows the same formula used today regarding property tax distribution. Approximately half will go directly to public schools; the other half will go to communities per the state's existing allocations.

- So THIS is untrue: "The state's formulas for distributing funds dictate that the largest share of property tax revenue goes to Sacramento and is spent according to complex state distribution formulas, Church said." NO. It does not change the formulas.

- This also is untrue: "Just because they might be generated in San Mateo County doesn't mean they will be spent there." Counties that have the largest concentration of under-taxed large businesses end up receiving more revenues from Prop 15. That is why Santa Clara will recoup so much revenue. Not sure where Mark Church is getting his info.

- This is true but extremely telling: "For decades, California, unlike other states, has not required assessors to regularly evaluate the market value of all commercial properties, and creating the capacity to do so would require staffing up and expanding training." YES! See what this is saying? For DECADES these huge commercial properties have not been assessed. But how wonderful that they will be now! Assessment is GOOD. Assessment pays for itself after one building is determined to be under-assesesed. And guess how many corporate buildings will be found to be underassessed? All of them.

- Prop 15 will not "collect more money from everyone." It will collect money ONLY from large corporate landholders of commercial properties worth more than $5 million but NOT from: residents, owners of residential properties, agricultural properties, small businesses, families, and individuals.

- Prop 15 will not create funding that will be "spent by politicians." The money will go to public school districts via existing local accountability processes and will go to funds for public services. It will go to assist vulnerable communities.

- Prop 15 will not create "gentrification." It will fund underserved communities that badly need assistance.

- Prop 15 will fund affordable housing, and will make it far more affordable for residential developers to build here!

- It will not cause "people in East Palo Alto" to have to pay property taxes. It closes taxes for COMMERCIAL property holders, not -people-. It will result in millions of dollars being invested in East Palo Alto. It will not tax individuals at all.

As you will see here, officials from East Palo Alto endorse Prop 15, as many Palo Alto Churches and nonprofits, as do I!

Web Link

We all stand to benefit from Prop 15! That is why so many nonprofits, small business organizations, school districts, economists, academics, PTAs, and researchers back it!

Again, feel free to contact me any time to discuss what Prop 15 will do for YOU.


Rebecca Eisenberg
Old Palo Alto
on Jul 12, 2020 at 11:09 am
Rebecca Eisenberg, Old Palo Alto
on Jul 12, 2020 at 11:09 am
18 people like this

Anon posted this while I was typing my comment above:

"It would apply to that valuable land under a privately-owned marginal small business, however, so, it could accelerate the destruction of small businesses."

This is incorrect. Prop 15 will NOT tax small businesses. In fact, Prop 15 provides tax subsidies to small businesses. A significant amount of funds generated by Prop 15 will go directly to services to assist with small businesses. That is why so many small business organizations back Prop 15!

As to the notion that billionaire commercial property landlords would pass on their tax increases to tenant small businesses, that has been disproven as well. If tax rates impacted rents so directly, our commercial rents would be the lowest in the world! Currently in Palo Alto, the typical billionaire commercial landlords pays as little as $500/month for properties they lease out for as much as $20,000/month. Under Prop 15, their property tax rates could go up to, say, $3000/month. They still are repeating $17,000/month in profits under those circumstances. Remember, they didn't become billionaires through -small-profit margins!

Again, feel free to reach out directly with questions - anytime. We all stand to gain huge from Prop 15, and from this page you will see how many people agree: Web Link


Kathy
Greater Miranda
on Jul 12, 2020 at 11:10 am
Kathy, Greater Miranda
on Jul 12, 2020 at 11:10 am
39 people like this

Nope -
It will increase the tax burden on everyone, as increased costs will be passed on as the cost of doing business.

Any other position is ill informed and naive.




Rebecca Eisenberg
Old Palo Alto
on Jul 12, 2020 at 11:34 am
Rebecca Eisenberg, Old Palo Alto
on Jul 12, 2020 at 11:34 am
10 people like this

Kathy - there is no basis to conclude that increased costs will be passed on to anyone. And I can say that without calling names :)

Every study done on the topic, including the one that forms the basis of this article, disproves the notion that property taxes are passed on to tenants: Web Link

Without resorting to studies, might I also direct you to observational evidence? If commercial landlord tax rates impacted rents, wouldn't we currently enjoy the lowest rents in the world?

Per above, landlords here in Palo Alto pay the lowest effective tax rate in the country. Yet our rents across the board are the highest. That is because tax rates do not impact rents.

I encourage everyone to read Prop 15 and the research that supports it. Ballotepedia's page on prop 15 is not bad:

Web Link)

Again, I'm happy to discuss more and answer any questions. As you see, this is a measure that both Adrian Fine and Tom Dubois publicly endorse. It also is endorsed by virtually all Democratic Presidential candidates including Vice President Joe Biden. It should not be a controversial matter given how many people on all sides of the political spectrum back it: Web Link

Once you learn more, I am confident that you will support Prop 15 as well. What a fantastic time to be a voter in the US, in California, and in Palo Alto :)


Rebecca Eisenberg
Old Palo Alto
on Jul 12, 2020 at 11:39 am
Rebecca Eisenberg, Old Palo Alto
on Jul 12, 2020 at 11:39 am
11 people like this

To clarify, these are the presidential candidates who back Prop 15:

2020 PRESIDENTIAL CANDIDATES (Current & Former)

Former U.S. Vice President Joe Biden
Former New York City Mayor Mike Bloomberg
U.S . Senator Cory Booker
South Bend Mayor Pete Buttigieg
Former U.S. Housing and Urban Development Secretary Julián Castro
U.S. Senator Kamala Harris
Former U.S. Rep. Beto O'Rourke
U.S. Senator Bernie Sanders
U.S. Senator Elizabeth Warren

Source Web Link


Kathy
Greater Miranda
on Jul 12, 2020 at 12:26 pm
Kathy, Greater Miranda
on Jul 12, 2020 at 12:26 pm
26 people like this

It doesn't matter if those folks are backing the measure. They are allied with the unionized public employees who would benefit from this measure, and who fund their political campaigns.

Let's look at the academic performance results of the CA public schools, whose districts and whose teachers'union members would greatly
in either benefit from this measure: only 51% is students are proficient in English language arts, and only 40% are proficient in math - state Caaspp results. These are dismal results. Yet increasingly large revenues have been directed to those public schools, to poorly educate students. Reform is needed, but not in Prop 13.


Resident
Another Palo Alto neighborhood
on Jul 12, 2020 at 12:31 pm
Resident, Another Palo Alto neighborhood
on Jul 12, 2020 at 12:31 pm
13 people like this

The headline and tone of the article seems to make this sound like good news.

I think there will be a lot of people who consider this extremely bad news. Making ends meet, particularly during the pandemic, is not easy for a lot of people and for some this will destroy their business or their ability to scrape a living. This type of thing is not good at any time and particularly now. Even for families who were doing reasonably well 6 months ago are now struggling.

Can we have some more compassion?


ABC
Barron Park
on Jul 12, 2020 at 12:45 pm
ABC, Barron Park
on Jul 12, 2020 at 12:45 pm
6 people like this

I'd be all for this if the money from this stayed in the city and went to the city's schools. If not, California residents are already very highly taxed, I really don't understand what we would be getting from this money.


Kathy
Greater Miranda
on Jul 12, 2020 at 12:48 pm
Kathy, Greater Miranda
on Jul 12, 2020 at 12:48 pm
14 people like this

From the article: Among the top donors to the committee supporting the November proposition are the California Teachers Association, the SEIU California State Council and the Chan Zuckerberg Initiative's advocacy arm.

Not surprising as the California Teachers Association and the SEIU are two of the main unions that would benefit financially from this measure.


common sense
Midtown
on Jul 12, 2020 at 1:00 pm
common sense, Midtown
on Jul 12, 2020 at 1:00 pm
11 people like this

Here is what the ballot measure says, contrary to the assertion on one poster:

"SEC. 8.7. (a) The Local School and Community College Property Tax Fund is hereby created in the State Treasury, to be held in trust, and is continuosly appropriated for the support of local education agencies as that term is defined in section 421 of the Education Code as that statute read on Janriary 1, 2020, and for the support of community college districts. The moneys deposited in the Local School and Community College Property Tax Fund shall be held in trust for schools, and shall be distributed as follows:
(1) Eleven percent (11%) of the moneys shall be allocated by the Board of Governors of the California Community Colleges to community college districts in proportion to the funding calculated for each district pursuant to the distribution formulas operative in statute as of January 1, 2020, ...
(2) Eighty-nine percent (89%) of tl'ie moneys shall be allocated by the Superintendent of Public Instruction to school districts, charter schools and county offices of education as follows:
(A) To school districts and charter schools, in proportion to each school district's or charter school's total funding calculated pursuant to subdivisions (a)-(i), inclusive, of section 42238.02 of the Education Code, as those provisions read on July 1, 2019. Any school district or charter school that qualifies as a "basic aid school district" or "excess tax entity" under subdivision (o) of that section shall have subtracted from its proportionate share of the Local School and Community College Property Tax Fund the amount by which the sum calculated in subdivision(j) of that section exceeds the amount calculated pursuant to subdivisions (a)-(i), inclusive, as each of those provisions read on July 1, 2019."

You notice it says "The Local School and Community College Property Tax Fund is hereby created in THE STATE TREASURY ..." The operative word is "STATE TREASURY". The organizations distributing the money are STATE entities.

You notice the technical jargon about the "BASIC AID DISTRICT" gets their allocation SUBTRACTED - subtraction mean taking away. Palo Alto Unified is a basic aid district, Menlo Park Elementary School District is a basic aid district, Los Lomitas Elementary School DIstrict is a basic aid district, and the list of San Mateo and Santa Clara school districts that are Basic Aid goes on and on.

Sadly, the poster does not understand that many commercial leases are "triple net" leases - the tenant pays property taxes, maintenance, insurance, utilities. Rental rates typically take into account the value of these costs (those properties with lower triple net expenses will charge higher rents). If the ballot measure passes, the small business tenant will higher rent and higher property taxes to pay. Some tenants can pass on the costs, other tenants cannot because of competition or pricing themselves out of the market, which means they go out of business. We are already seeing our favorite restaurant or retailer go out business due to the COVID-19 pandemic. This would push more of those places to go out of business.

Sadly this measure does little in ensuring accountability for results, and the problem is not just throwing more money at schools. We saw with the Palo Alto Unified School district how that worked. The last parcel tax measure said the money would go for class size reduction, etc. Instead it went to salary increases for administrative staff as well as teachers


To fund education, a ploy?
Midtown
on Jul 12, 2020 at 1:07 pm
To fund education, a ploy?, Midtown
on Jul 12, 2020 at 1:07 pm
7 people like this

CA Lottery money for education:
California Lottery officials shortchanged schools by millions, state audit says
Web Link


Rebecca Eisenberg
Old Palo Alto
on Jul 12, 2020 at 1:14 pm
Rebecca Eisenberg, Old Palo Alto
on Jul 12, 2020 at 1:14 pm
13 people like this

Commercial landlords and billionaire real estate investors thank you for your post.

I would be happy to connect you with any number of people at the coalition of nonprofits who have worked to have this measure put on the ballot for years. Prop 15 is intended to help eradicate poverty and homelessness, in addition to providing crucial tax funds to our most poor communities, including East Palo Alto.

It is true that Prop 15 will assist poor neighborhoods more than it will assist wealthy neighborhoods. I think that is ok, and I hope you do too.

It also is true that it will assist basic aid school districts less than it will aid impoverished school districts. But it will assist all school districts.

To the posters who complain of higher taxes: these taxes only will be levied upon businesses - and only large businesses, not on any individuals.

To those who continue to insist, without attribution, that these taxes are passed on to tenants including through the lease agreements, that might be true, but the revenue generated will help tenants.

Take, for example, the largest employers in Palo Alto. Right now -because we don't have a business tax - Palantir, Tesla, and HP pay ZERO taxes to Palo Alto. All of their use of resources is paid for by residents.

Prop 15 closes these tax loopholes and requires the largest commercial landlord to pay property taxes. If the billionaire who owns the building that Tesla or HP leases passes on some of the taxes to Tesla or HP, I wonder why we care. Right now Tesla and HP pay nothing. So, that addresses the concern about "triple net" leases.

As to potential impact on small businesses - -as I mentioned, Prop 15 funds includes tax subsidies and tax credits to small businesses if they are impacted negatively. Written into Prop 15 are protections for small businesses. That puts small businesses in a much better position than they currently are in, given that they currently face rent hikes at the whim of their landlords without any protection at all.

Finally, to those who are worried about higher taxes -- please please please remember that Prop 15 only taxes large businesses, it does not tax individuals.

As a reminder, the reason California has among the highest personal income tax rates in the country is due to the corporate loopholes create by Prop 13.

Prop 15 will close these corporate loopholes, allowing our state FINALLY to reduce taxes on individuals.

In sum: Prop 15 taxes big businesses in order to lower taxes on individuals. It's truly that good.


Rebecca Eisenberg
Old Palo Alto
on Jul 12, 2020 at 1:20 pm
Rebecca Eisenberg, Old Palo Alto
on Jul 12, 2020 at 1:20 pm
13 people like this

As to those of you who oppose taxes generally, you are not going to take away taxes. The question is: should individuals and families have to pay the most taxes, or should our wealthiest corporations - many of which are based outside of this country - pay the most taxes?

Right now individuals in California pay the highest tax rates in the country, while large corporations pay the lowest tax rates.

Prop 15 brings more balance by raising taxes for large corporations and delivering proceeds and subsidies to individuals.

So ask yourself: should we continue to give billionaire real estate tycoons (including those who are based in Asia and elsewhere outside of the US) a free ride? Or should we tax them?


common sense
Midtown
on Jul 12, 2020 at 2:29 pm
common sense, Midtown
on Jul 12, 2020 at 2:29 pm
14 people like this

The poster mentions non-profits who worked to put this measure on the ballot; they include:

California Federation of Teachers
California Teachers Association
SEIU (union that represents many government workers).

There was a previous version o this measure, which the above spent $3.5 million to collect signatures to put it on the ballot a few years ago; unfortunately when it polled less than 50%, the rewrote the measure, they spent millions more to collect signatures to replace the original measure. So far the proponents of the measure have spend over $14 million on the measure.

Big money, but it can be big returns - just imagine the salary increases for all the people those unions represent. And then there are the government administrators and managers who get the same increases the union workers get.

Previous poster wrote "Prop 15 is intended to help eradicate poverty and homelessness". Sorry, Prop 15 does not make the claim that it will end poverty and homelessness; it just promises to raise taxes on businesses, transfer those additional taxes to the state to redistribute to local governments and school districts. There are no restrictions on how the money is spent - it can be for higher salaries for government employees, it can be for paying for the pension liabilites, it can be spent on a number of pet projects (like the road furniture on Ross Road).

When a business pays more taxes, it's called raising taxes; I wish some would stop dissembling and call it "closing tax loopholes". Voters should not have to be tricked into voting for a measure - be honest about it; if voters feel the additional taxes will help, they are will vote for it.

Many small businesses are individuals or groups of individuals - think of your dentist, accountant, the neighborhood restaurant. They rent, they pay the property tax on the place they rent. If Prop 15 passes, they will pay more in property taxes because it's in the lease.



Margie
Old Palo Alto
on Jul 12, 2020 at 2:57 pm
Margie, Old Palo Alto
on Jul 12, 2020 at 2:57 pm
10 people like this

When Ms. Eisenberg says, "these taxes only will be levied upon businesses - and only large businesses, not on any individuals...", it sounds a lot like "We're going to build a big beautiful wall and Mexico is going to pay for it."


Richard
Charleston Gardens
on Jul 12, 2020 at 3:29 pm
Richard , Charleston Gardens
on Jul 12, 2020 at 3:29 pm
18 people like this

This is plain and simple another money grab for the tax and spend politicians in Sacramento There's never enough money
Let's face it, they don't have enough money for all there giveaway programs for all the people who never contributed The same reason there saying to defund the police No money in the city, county and state coffers
Why did the governor demand all state employees take pay cuts but the prison guards union got the lowest amount .04% ? The most powerful union in the state
There out of money !!!
I for one am tired of funding all these give away programs Just remember, any business that the landlords of these commercial buildings pays rent to will pass that cost on to the consumers
Send this garbage to the shredder where it belongs
Vote NO !!!


Joseph E. Davis
Woodside
on Jul 12, 2020 at 3:32 pm
Joseph E. Davis, Woodside
on Jul 12, 2020 at 3:32 pm
20 people like this

Certainly an awful idea. Why would we want to direct more resources to the government, which is so totally unable to manage them effectively? See, for example, the horror of public pension finance.


Nayeli
Midtown
on Jul 12, 2020 at 4:03 pm
Nayeli, Midtown
on Jul 12, 2020 at 4:03 pm
26 people like this

I really hate it when tax and spend advocates use deceptive "newspeak" when they try to argue that this isn't a "tax" on the rest of us. The politicians who take more (to spend on whatever they want) will be driving up the costs to the rest of us.

After all, landowners (including corporate landowners) aren't charities. If businesses pay more (whether from tax increases, regulations or even increases to the minimum wage), so will everyone else. Those costs are just passed down to the rest of us through various "nickel-and-dime" increases.


Anonymous
Duveneck/St. Francis
on Jul 12, 2020 at 4:47 pm
Anonymous, Duveneck/St. Francis
on Jul 12, 2020 at 4:47 pm
18 people like this

California state politicians and bureaucrats, the state legislature, state bureaucracy AND Governor Gavin Newsom already tax and spend excessively.
I oppose increasing taxes, fees, penalties on CA taxpayers.
Amusing how billionaires fund efforts to put measures on the ballot, also lobby the legislature, city of San Francisco, etc. for things like basic income, even more homeless funds (down a black hole over the years, attracting more people from out of state to SF), anti-single family home measures, aid to illegal aliens.
THEY are billionaires with off-shored funds, political influence, ability to make major stock donations w/o impacting their lifestyles, LLCs, gated estates, etc., while WE middle and upper middle class taxpayers and homeowners pay high income taxes, property taxes, and fees.
The public school system has been lavishly funded with poor results. In particular, over the decades, see: Oakland, which has a lengthy documented track history of mismanagement of their public schools, even state takeover, amid very high funding, along with very bad educational and social outcomes.
But I guess the solution is to find yet another revenue source for them to offer basic income to more random people! Outrageous, people are taking a clue. Some of us are close to voting with our feet.


TB
Menlo Park
on Jul 12, 2020 at 4:47 pm
TB, Menlo Park
on Jul 12, 2020 at 4:47 pm
14 people like this

Some commenters seem to be confused... this will only re-assess taxes on commercial properties, not residential ones. Many of those commercial properties are already charging market rents, but are paying VERY little in taxes because those properties are passed down from generation to generation without reassessment. That means the rest of us, the Residents, carry the burden of supporting our state through our taxes.

I'm in strong support of Prop 15!


Anonymous
Duveneck/St. Francis
on Jul 12, 2020 at 5:02 pm
Anonymous, Duveneck/St. Francis
on Jul 12, 2020 at 5:02 pm
5 people like this

@ TB
I get what you are saying in theory, my problem is the politicians who are out of control on tax and spending.
Also, not every property is passed down.


T. Gonzalez
another community
on Jul 12, 2020 at 5:51 pm
T. Gonzalez, another community
on Jul 12, 2020 at 5:51 pm
15 people like this

Any new tax in California is a bad tax. The state gets enough and spends it foolishly. Let's see what the Howard Jarvis Tax Assn. Has to say about this. You need only look it up. The states gives information as to where this money will go but it never gets there.
The revenue would be distributed to:
a) the state to supplement decreases in revenue from the state's personal income tax and corporation tax due to increased tax deductions.
b) counties to cover the cost of implementing the measure. Second 60 percent of the remaining funds would be distributed to local governments and special districts, and 40 percent would supposedly go to school districts and community colleges (via a new local School and Community College Property Tax Fund). This from an article I read. They say it's going to schools but it does not say where exactly it must go. I worked for the State of California for years.


JR
Palo Verde
on Jul 12, 2020 at 6:18 pm
JR, Palo Verde
on Jul 12, 2020 at 6:18 pm
3 people like this

I am all for increasing taxes on office space property, but we must not increase tax on retail property. In addition, it does nobody any good if those tax dollars get funneled to corrupt interests (such as those building trains to nowhere).

A reasonable proposal is to increase property tax on offices and industrial buildings (NOT including retail) and then use the funds to reduce residential property taxes by a commensurate amount. Unfortunately proposition 13 doesn't do that so I will be voting NO.


N. Cornejo
another community
on Jul 12, 2020 at 7:50 pm
N. Cornejo, another community
on Jul 12, 2020 at 7:50 pm
7 people like this

Well, renters are going to have to remember if property taxes go up for owners, rent will go up for renters. So besides CA being the state that taxes the citizens the most already, you want to add higher property taxes while we have an economy like this? People will lose their homes and rental properties because nobody will be able to afford it.


Kenny
University South
on Jul 12, 2020 at 8:13 pm
Kenny, University South
on Jul 12, 2020 at 8:13 pm
7 people like this

"Prop 13 was and is very, very unfair"

No, it was not, and is not. What is unfair is for people to be forced out of their homes simply because a bunch of uber-wealthy yuppies flooded in. That was especially true for senior citizens, not to mention the average Joe and Jane. As those who benefit from Prop 13 age out of the system (i.e. pass away), the effects of Prop 13 decrease over time.


Giulio Escarelli
Southgate
on Jul 12, 2020 at 9:29 pm
Giulio Escarelli, Southgate
on Jul 12, 2020 at 9:29 pm
5 people like this

NO ON 15
Please share this on all social media.
This November we will have Prop 15 on the ballot which is a falsely written proposition to ruin Prop 13 from the 1970s that was truly for the people to save money. No mention of prop 13 in the prop 15. It undoes the Comercial and Industrial side of 13. If Prop 15 Passes it is one more reason for businesses to leave California which will hurt employees. It will force the industrial & commercial property owners to skyrocket the already high rent to astronomical levels. Raising the rents to cover the super high increase in the property taxes will trickledown to consumers in higher costs of everything we buy. The Governor loves to tout that the California economy is the sixth largest economy in the world. Prop 15 is another money Grab by the state politicians so they can generate billions to pay their salaries and pensions and waste money on projects like this high speed Brownsoggle project. Vote No on Proposition 15 - it’s a lie to scam more money from the citizens of California. The Ads will tell you it’s for the schools and the children which is a lie, the Ad will repeat that Firemen, the Police, the Prison Guards and so many other state organizations support the money grab that will actually hurt the regular folks.

Please share this on all social media.

NO ON 15


Do u really trust the govt?
Embarcadero Oaks/Leland
on Jul 12, 2020 at 9:29 pm
Do u really trust the govt?, Embarcadero Oaks/Leland
on Jul 12, 2020 at 9:29 pm
18 people like this

[Post removed.]


Me 2
Old Palo Alto
on Jul 12, 2020 at 9:52 pm
Me 2, Old Palo Alto
on Jul 12, 2020 at 9:52 pm
20 people like this

I'm all for rebalancing our tax burden away from income, which can be variable to property taxes, which is a more stable base. That's why CA is so subject to wild budget surplus/deficit swings based on the economy.

However, Prop 15 doesn't do that. It's just an additional tax. For me to support it, it should have including a corresponding *reduction* in the state income tax rate or sales taxes.

But it doesn't, of course.

And, geez, Ms. Eisenberg still doesn't get the part that all taxes are paid by the end consumer. Of course costs get passed down. Either she doesn't understand how businesses work or is trying to pretend it doesn't happen.


Colin
another community
on Jul 12, 2020 at 10:08 pm
Colin, another community
on Jul 12, 2020 at 10:08 pm
13 people like this

California. Perpetually ranked nationally at or near the bottom for business. Over-regulation and taxation and now you want the double whammy: increased taxes and cost for consumers and business owners (who, by the way, are not all billionaires) along with the burden small business is carrying due to the pandemic.

And why can't Xavier Becerra and Co describe Prop 15 in plain language? I dont have to ask "what are they hiding?" Since we all know exactly why they mislabel propositions.

I'm heartened to see that many posting here are anti-prop 15. No on 15!


chris
University South
on Jul 12, 2020 at 11:16 pm
chris, University South
on Jul 12, 2020 at 11:16 pm
7 people like this

This prop has a very slim chance of passing, but if it were to pass it would push California into a much deeper recession than it is now with the COVID effects.


Anon
Evergreen Park
on Jul 12, 2020 at 11:40 pm
Anon, Evergreen Park
on Jul 12, 2020 at 11:40 pm
12 people like this

California already has about the same per capita property tax, about $2000, as Texas, a state that has no income tax. California has an additional $100B income tax revenue.

This is insane.

And what to show for it? Pretty much nothing. So much money is wasted. I don't know how the proponents can have any conscience in their heart to ask for more taxes. It is immoral.

The proponents are trying to drive the thin end of a wedge to divide property owners into "big" and "small". It is a disgusting trick. Don't be fooled.



Larry
Old Palo Alto
on Jul 12, 2020 at 11:51 pm
Larry, Old Palo Alto
on Jul 12, 2020 at 11:51 pm
9 people like this

If you gave California a billion dollars a day it would not be enough and they still raise our taxes stages greedy that do not have know how to manage money and they think there were their personal ATM machine anytime they want money they raised our tax and with this pandemic I bet they're going to raise our license fees again


Citizen PA
Another Palo Alto neighborhood
on Jul 13, 2020 at 2:13 am
Citizen PA, Another Palo Alto neighborhood
on Jul 13, 2020 at 2:13 am
4 people like this

"this should have been phased in "

Maybe, but millions of Californians of ordinary means who struggle to live in their homes saw an astronomical increase in THEIR income taxes in 2017 while the wealthiest got a tax break. Their tax increase wasn't phased in. Prop 15 finally helps rectify the problem that with Prop 13, corporations could afford to hang onto commercial property longer and not let it change hands, so residential property took on more and more of the burden over the years.

Prop 15 will exempt residences, so their prices shouldn't go up.

As for people complaining that CA taxes are too high -- and yet, we have a serious overcrowding of highly paid jobs. Our taxes *should* be higher for those businesses.


Brian
Another Palo Alto neighborhood
on Jul 13, 2020 at 5:16 am
Brian, Another Palo Alto neighborhood
on Jul 13, 2020 at 5:16 am
16 people like this

If the California Federation of Teachers, California Teachers Association, and the SEIU Support something, then I oppose it, and so should all of us. These are extremist organizations that lead us to becoming Venezuela if they were given free reign.


Calilife
Crescent Park
on Jul 13, 2020 at 6:30 am
Calilife, Crescent Park
on Jul 13, 2020 at 6:30 am
5 people like this

Turns out... when u charge people HIGHER TAXES, u collect more taxes!


Luciano
another community
on Jul 13, 2020 at 6:59 am
Luciano, another community
on Jul 13, 2020 at 6:59 am
8 people like this

[Portion removed.] First it's commercial properties, then rental properties, then residences. It's all a ruse to become a socialist society where the state owns or controls all private property.


Santiago
Barron Park
on Jul 13, 2020 at 8:19 am
Santiago, Barron Park
on Jul 13, 2020 at 8:19 am
12 people like this

I would support this if it included a re-assessment AND a subsequent rebalancing so that tax revenue stayed the same. For example, after re-assessing all commercial property, the 1% base tax rate would be set to 0.87% or wherever it lands.

This would be the correct outcome if people were really concerned with fairness with regard to businesses vs. residents. As its written, the public unions and their politician friends will simply abscond with all (or almost all for PR reasons) of the gains at the expense of the newly taxed ("but now you can use the new prop 15 funds to pay down the unfunded pensions, meaning we can have a bigger raise this contract!")

First things first. We need to put the public unions in check. Who can honestly now say the police union has made their life better en route to securing 7-figure pensions and job security for officers regardless of how well they perform? What about the prison guards?


Resident
Another Palo Alto neighborhood
on Jul 13, 2020 at 9:26 am
Resident, Another Palo Alto neighborhood
on Jul 13, 2020 at 9:26 am
9 people like this

Here's a couple of examples of government think tank.

We are not getting enough revenue from tolls on bridges since nobody is driving as much due to pandemic so we should increase the tolls on bridges.

We are not getting enough revenue from gas tax since nobody is driving as much during pandemic so we should raise the gas tax.

When driving gets back to normal levels, you can guess that these increases will not be dismissed. The people paying for these increases in tolls and gas taxes are us, the consumer, not big business. We pay for it on extra costs for food in our supermarkets and deliveries to our doors due to the increased costs of transporting over bridges and by way of gas/diesel driven trucks. Those prices are unlikely to go down.

Any excuse by government to increase the taxes we pay are not going to be paid by big business, they will be passed down to us the consumers by increased costs in goods, services, and unavoidable charges, both for essentials and luxuries.


Beware the Camel's Nose
Old Palo Alto
on Jul 13, 2020 at 11:00 am
Beware the Camel's Nose, Old Palo Alto
on Jul 13, 2020 at 11:00 am
19 people like this

Be careful. There is an old Arabic saying "Do not allow a camel to put his nose under the edge of your tent, for soon you will have a camel in your tent." Proposition 15 is the camel's nose. Of course every agrees it's a good thing to increase taxes of the billionaire property owners. But soon the politicians will attempt to undo Prop 13 and start re-assessing and taxing small property owners and homeowners.


Jennifer
Barron Park
on Jul 13, 2020 at 11:04 am
Jennifer, Barron Park
on Jul 13, 2020 at 11:04 am
12 people like this

It's naive to think that this will not impact everyday resident. If property taxes were raised on apartments, don't you think landlord will ultimately increase the rent? Some landlords I know have been keeping the rent low since they have low property taxes. They can no longer do that if their property taxes suddenly go up. Many commercial businesses are triple net, meaning the businesses pay the property taxes, not the landlords. Many of these leases are long-term, meaning 10-20 years. If the property taxes suddenly increase, don't you think the businesses will have to pass the additional cost to consumers? This would impact everyday cost, grocery, dining out meals, entertainment, just to name a few. We all will end up paying for the property tax increase, not just the property owners.


BruceS
Greenmeadow
on Jul 13, 2020 at 11:07 am
BruceS, Greenmeadow
on Jul 13, 2020 at 11:07 am
5 people like this

To all those who've been saying that real estate taxes will get passed along to everyone, please use some common sense (and look at studies that have been made): Rental prices are not based on expenses, they're based on what the market will bear.

Any rental owner can tell you this (I happen to own a second house that is currently rented out). If taxes go up, I can't charge more, nobody would rent the place. The property owners will pretty much have to bear the cost of this, but don't cry for them. They've made a ridiculous profit over the years. It's not a bad idea to cut into that.


Anon
Another Palo Alto neighborhood
on Jul 13, 2020 at 11:28 am
Anon, Another Palo Alto neighborhood
on Jul 13, 2020 at 11:28 am
1 person likes this

Posted by Brian, a resident of Another Palo Alto neighborhood

>> If the California Federation of Teachers, California Teachers Association, and the SEIU Support something, then I oppose it, and so should all of us. These are extremist organizations that lead us to becoming Venezuela if they were given free reign.

"Prove it." Where is the evidence that these organizations are basically "Communist"?

I've been kind of skeptical of this proposition because of the way it is being promoted. There is an assumption being made that somehow all the taxes will be paid by the super-rich. That is unlikely-- the super-rich have armies of tax lawyers and accountants working to make sure that doesn't happen. I still might favor the proposition, but, rates should be adjusted so that it is revenue-neutral on day 1.

OTOH, taking your (@ Brian's) viewpoint, then, I guess I should favor it, because, if the people opposed to it are invoking Venezuelan Communists, the actual arguments against it must be very, very weak indeed.

If you have actual, reasoned arguments against the proposition, please state them.


krobinson
South of Midtown
on Jul 13, 2020 at 12:01 pm
krobinson, South of Midtown
on Jul 13, 2020 at 12:01 pm
9 people like this

Thanks to Rebecca Eisenberg for the very clear explanations. There's a silent majority who agree with Prop15 and with everything Eisenberg is saying.

It's always been true that there's a set of anti-tax, anti-government, generally angry and dissatisfied people who complain all the time on PaloAlto Online. I just ignore them.

Keep it up, Eisenberg! Many of us (normally silent) are right with you on this.


common sense
Midtown
on Jul 13, 2020 at 12:12 pm
common sense, Midtown
on Jul 13, 2020 at 12:12 pm
Like this comment

Commercial rental properties and Residential Rental properties are very different businesses. For example, residential property owners don't require their tenants pay the property taxes, or insurance. There are many other nuances, such as tenant improvements, escalation clauses, etc.




Alan
College Terrace
on Jul 13, 2020 at 4:27 pm
Alan, College Terrace
on Jul 13, 2020 at 4:27 pm
10 people like this

This measure makes sense only if California income tax is reduced to compensate for it. Otherwise don’t be fooled by its won’t hurt you message. Have you not looked at your recent CA tax returns and the ~10% you pay every time you buy any non-food item!!


Neighbor
Greenmeadow
on Jul 13, 2020 at 4:39 pm
Neighbor, Greenmeadow
on Jul 13, 2020 at 4:39 pm
6 people like this

For those who criticize school performance, it's important to tie performance to resources. Currently, California is 23rd in the nation in spending per student. There are many teachers who spend hundreds of their own dollars each year on supplies for their students, and although teachers unions are strong, there are many who leave the profession because they are not paid a living wage.

Prop 15 is a way to rebalance. Obligations were evenly distributed when Prop 13 first passed; 50% of property tax revenue was generated by residential property owners and 50% by commercial properties. It is now 75% residential/25% commercial because of the loopholes. I share others' concerns about a slippery slope that could lead to residential property tax change, but still support this attempt to right the ship.


CrescentParkAnon.
Crescent Park
on Jul 13, 2020 at 4:59 pm
CrescentParkAnon., Crescent Park
on Jul 13, 2020 at 4:59 pm
4 people like this

So many blanket unqualified and wrong statements here by people, but I guess that is par for the course - and never corrected, commented or rebutted - by PAO.

Prop. 13 made sense for the residential real estate market. Real people their lives and families living in an area, sometimes for generations, need protection from tax inflation because they, unlike businesses, do not earn money in real-time - especially retired people, but in modern times even working people. People and families should get protection from the costs of taxes on real estate because the market destabilizes the people ... and the government is about protecting people. Residents who buy their houses in today's market presumably analyze whether they can afford it, and the taxes. If taxes are volatile it will upset society and people to the point, as it did before, of destabilizing the unit our country is based on. Also, money people save on taxes is money that goes into the economy - the virtuous cycle.

Commercial real estate is a different animal. A business opens in a real time economy with a plan that presumably creates a profitable economic entity that can survive in real time in a real economy. Some business do not make it, and there are overlapping issues with real estate and rent costs, but in general businesses must compete in the current real world at the real value of money they make and can raise prices or make strategic decisions that a residential owner can not. It is conceptually reasonable and fair that businesses pay taxes in the real world economy while to some extent people are sheltered from those changes.

HOWEVER, to spike commercial real estate taxes on businesses is reckless and irresponsible, especially if certain businesses or investors with political clout can twist the legislation to their benefit. The Prop. 13 constraints should be lifted very carefully and transparently so that the disruption to businesses and resident that it will inevitably cause is not too big a burden to them or the overall economy. trying to do this via the ballot Proposition is not really ideal.


Anon
Another Palo Alto neighborhood
on Jul 13, 2020 at 5:36 pm
Anon, Another Palo Alto neighborhood
on Jul 13, 2020 at 5:36 pm
2 people like this

Posted by Alan, a resident of College Terrace

>> This measure makes sense only if California income tax is reduced to compensate for it. Otherwise don’t be fooled by its won’t hurt you message. Have you not looked at your recent CA tax returns and the ~10% you pay every time you buy any non-food item!!

I'm confused by the flow of your statements, but, the ~10% is sales tax, not income tax, and, I would love to abolish Prop 13 limits and abolish sales tax at the same time. Sales tax is the most regressive tax (hits the poor the most, and middle income). Income tax and property tax (a tax on wealth) are much more fair.

But, I am concerned about the implementation here-- they should have made the initial target revenue-neutral, and, phased in the change. Sudden tax changes are disruptive.


Marie
Mountain View
on Jul 13, 2020 at 6:14 pm
Marie, Mountain View
on Jul 13, 2020 at 6:14 pm
7 people like this

For me, this prop is not about raising revenue: it's about fairness.

When the state is unable to tax commercial property based on its current value (like every other state in the union), we end up raising sales taxes and income taxes just to maintain the same level of school funding. This has resulted in a tax system that is less stable and less fair. I am looking forward to voting YES on Prop 15.

As for comments about how this will raise commercial rents: it will not. This has been established since Adam Smith wrote about rents and land taxes in 1776 in The Wealth of Nations. If you need proof of this, look at rent prices in virtually identical units purchased a decade apart: landlords just pocket the tax savings.


Citizen PA
Another Palo Alto neighborhood
on Jul 13, 2020 at 6:42 pm
Citizen PA, Another Palo Alto neighborhood
on Jul 13, 2020 at 6:42 pm
8 people like this

"Be careful. There is an old Arabic saying "Do not allow a camel to put his nose under the edge of your tent, for soon you will have a camel in your tent." Proposition 15 is the camel's nose. Of course every agrees it's a good thing to increase taxes of the billionaire property owners. But soon the politicians will attempt to undo Prop 13 and start re-assessing and taxing small property owners and homeowners."

Um, Camel's butt end is in my tent and the richest get to use it, not me.

This situation needs to be made more fair, and Prop 15 does that. Vote yes.


Jon
Downtown North
on Jul 13, 2020 at 10:26 pm
Jon, Downtown North
on Jul 13, 2020 at 10:26 pm
4 people like this

I think it helps to understand who you are taxing here.

1) Most Commercial Leases have mechanisms that pass thru property taxes - the large and small businesses will pay for the initial increases. Many of our County’s “Tenants” are venture backed and will absorb this. Excluding large corporations, the balance of other tenants are small and will have to pass thru these increases to the consumer. If you go out to eat, shop or have a CPA with an office- their costs will go up.

2) Smaller landlords that have lower quality properties but can hang on to them because of the lower taxes will be forced to sell to larger institutional owners or wealthier landlords (rich get richer).

3) Landlords who cannot pass thru taxes will make less income or NOI - this will lower the value of the property and lower the “tax revenue” that comes with it. Once again, the rich can absorb this but families that rely on this income will be put under additional strain as this passive income might pay for living expenses, assisted living or medical bills in some cases. Wealthy investors will purchase this property at a discount as these families might be forced to sell due to less income.

4) This is the wrong time for Prop 15 - many companies are already leaving the state and taking their employees with them. No one knows if people will be using an office again and lots of vacant commercial space will be on the other side of this pandemic. The Bay Area weather and Amenities are great but the rest of CA will suffer as their counties will not be able to compete with out of state offerings and lower costs. This will create a more unbalanced California whereby Bay Area counties will be making up for vacancy and lost revenue from lower values in other counties due to lack of corporate interest.

5) Finally - this initiative will not hurt wealthy landowners, it will give them the biggest opportunity in more than 40 years as they get to buy up all the properties from the few people that need protecting.

If you want large corporations and rich people to pay more taxes Prop 15 isn’t the answer.



Matthew Pray
Embarcadero Oaks/Leland
on Jul 14, 2020 at 1:47 am
Matthew Pray , Embarcadero Oaks/Leland
on Jul 14, 2020 at 1:47 am
4 people like this

Are we REALLY going to cosign for this? They have put this to us and we defeated it. A tweak here, a promise there, some political parlance, and a few back room hand shakes and here we are again. NO WAY! Please read it all the way through. SMH.


Anon
Another Palo Alto neighborhood
on Jul 14, 2020 at 8:45 am
Anon, Another Palo Alto neighborhood
on Jul 14, 2020 at 8:45 am
4 people like this

Posted by Jon, a resident of Downtown North

>> If you want large corporations and rich people to pay more taxes Prop 15 isn’t the answer.

Properly implemented, it could be part of the answer. But, clearly many of the proponents don't understand all the subtleties which will lead to a lot of unintended consequences.


DTNResident
Downtown North
on Jul 15, 2020 at 5:17 am
DTNResident, Downtown North
on Jul 15, 2020 at 5:17 am
20 people like this

@Rebecca Eisenberg: This is literally the most ill-informed comment I've ever seen:

"As to the notion that billionaire commercial property landlords would pass on their tax increases to tenant small businesses, that has been disproven as well."

Almost all commercial leases are triple net leases. In a triple net lease, I pay the landlord the rent and then I pay 100% of the taxes on the share of the building that I occupy. Yes, if the property taxes go up by $1, I pay $1 more. If they go up by $3000, I pay $3000 more. As a business owner in a pandemic, I can't pay 3 cents more. But thank goodness we have Rebecca Eisenberg who didn't realize this basic fact, to tell us of the glorious benefits of her plan.

And once every small business owner in town realizes that the property tax rates will only be cut if the property tax rates on homeowners are also put into the same bucket, I'm going to vote to raise them on homeowners 100% of the time. See how this works to pit each group against one another?

And note, to renters outside of Palo Alto, you are just as rich as Rebecca Eisenberg thinks property owners are, so don't be surprised when the rest of the state uses these same arguments against you. Think of all the good to them that your increased property taxes can do!

All this will do is cause more business owners like me to leave the state, making your home property taxes more valuable than ever. Vote for this at your peril.


CrescentParkAnon.
Crescent Park
on Jul 16, 2020 at 12:29 am
CrescentParkAnon., Crescent Park
on Jul 16, 2020 at 12:29 am
5 people like this

DTNResident:

While it is true that one way or another the cost of taxes will be felt in the prices of rents, your follow-on comment does not follow, and there is no logic in changing the homeowner's taxes ... just out of spite or to strike fear in the hearts of homeowners with threats of a total collapse.

It's also a very minute effect of people who say the government is oppressing me so much with taxes that I am going to move to another city, county, state or country. People and companies say that, but they almost never do it. Those who do move are welcome to. Any American I respect wants our city, state and country to work, and since Reagan we have seen a slow and now hastening decline in so many metrics just so billionaires can take the money they save in taxes and divert some of it to pay off their politicians who in turn again give them more tax cuts. Their narrative makes it all about contempt for those who are not rich and powerful, even as they cut their legs out from under then they blame them for not standing up.

> And once every small business owner in town realizes that the property tax rates will
> only be cut if the property tax rates on homeowners are also put into the same bucket,
> I'm going to vote to raise them on homeowners 100% of the time. See how this works
> to pit each group against one another?

They have virtually nothing to do with each other.


Anon
Another Palo Alto neighborhood
on Jul 16, 2020 at 10:13 am
Anon, Another Palo Alto neighborhood
on Jul 16, 2020 at 10:13 am
2 people like this

@ CrescentParkAnon.

You make some good points, but, you also did not address something. As it is currently envisioned being implemented, it may very hurt many small businesses. That is often a bad thing in itself. It is also bad politics, because a lot of political Independents are associated with small businesses.

There are two problems with the current Prop-13 property tax setup: it is a grossly unfair unlevel playing field, and, it favors the super-rich. This measure may very well level the playing field somewhat-- that is good. But, it likely will miss the super-rich, and, hit many small businesses on the Peninsula.


Young Neighbor
Mountain View
on Jul 16, 2020 at 5:00 pm
Young Neighbor, Mountain View
on Jul 16, 2020 at 5:00 pm
Like this comment

@DTNResident: "All this will do is cause more business owners like me to leave the state".

I dont believe that will happen, but as a young person who can't even dream of owning a home without leaving the state, threatening that a bunch of conservative rich homeowners in Palo Alto will leave the state is equivalent to threatening me with lower housing prices and a good time.


Citizen PA
Another Palo Alto neighborhood
on Jul 16, 2020 at 6:23 pm
Citizen PA, Another Palo Alto neighborhood
on Jul 16, 2020 at 6:23 pm
8 people like this

@Young Neighbor,
The idea that you could buy a home in the Bay Area especially Silicon Valley on a regular person's salary hasn't been true in decades, with a very few exceptions (like the VA subsidized housing in the '50s after the war). In some ways, it was harder when I was your age, because the interest rates were so high. Imagine trying to buy a $250,000 house on $25,000/year (starting engineer) when rent was $1000/month for a small crappy apartment in a sketchy neighborhood and interest rates were 9%. People I know who got into homes spent most of their lives outside of work on the effort, including living in pretty unsafe areas in order to get SOMETHING and then move up. Even when the economy hits the skids here, housing never gets what you would ever call affordable, it just gets cheaper (and looks "affordable" in hindsight to people with higher salaries).

I just did a Zillow search on properties for sale in a circle drawn around Palo Alto and SJ including the East Bay, and found almost 500 properties for sale for under $500,000. Many of them were under $300,000. They aren't great, but everything I've seen looks nicer than my starter home which was occupied by a drug dealer when escrow closed (and every room had to be rented out to make ends meet, once it was even remotely habitable, which had to be DIY on pocket change every week). You can in fact probably afford something, you just can't afford something you would want to live in.

If you want to buy, there is just a lot of competition. That's the fault of big employers in the area. Ask them to start finding satellite locations where there is nicer affordable housing, and investing in the infrastructure in those places to make them nicer for their workers. That said, if you want to put down roots here, you have to buy. Think of the most your willing to sacrifice as far as your standard of living. And then remember, you're competing with everyone else willing to do that, and go beyond what you would consider is an acceptable sacrifice. Then go one step down. You will find a place to live. Eventually, after you sacrifice for decades, you can move up here or somewhere else. Prices can go down/you can lose money, but not usually if you stick it out for 20 years.

I am not being facetious, I have pressed good friends who thought they couldn't afford to bite the bullet, and all of them were glad in hindsight. When you finally get your costs stable, you can endure the attacks of people who think you waltzed into that house and blithely hit the lottery. That's not new either.


Citizen PA
Another Palo Alto neighborhood
on Jul 16, 2020 at 6:27 pm
Citizen PA, Another Palo Alto neighborhood
on Jul 16, 2020 at 6:27 pm
5 people like this

It needs to be clarified that when Prop 13 began, businesses shouldered a more equitable portion of the tax burden. Over time, homeowners have shouldered more and more of it. This proposition will not hurt homeowners and is aimed at restoring that cost-sharing balance, so those who own office buildings pay their fair share.

Rebecca Eisenberg, what protections are there for small businesses?


CrescentParkAnon.
Crescent Park
on Jul 19, 2020 at 5:15 am
CrescentParkAnon., Crescent Park
on Jul 19, 2020 at 5:15 am
1 person likes this

Anon.
> As it is currently envisioned being implemented, it may very hurt many small businesses.

That is an implementation issue. I see a lot that could be criticized about the approach, but I think something should be done to remove in a way that is smooth and fair to commercial property owners and there tenants. How does it hurt small businesses?

> There are two problems with the current Prop-13 property tax setup: it is a grossly unfair unlevel playing field, and, it favors the super-rich.

I think Prop. 13 does what it was supposed to do, which is to prevent people who live in a place from being priced out by real estate inflation. That is a very good thing. I am not aware that Prop. 13 favors the super-rich, but I would not be averse to there being some kind of limit to the size or value of an estate. The super-rich should pay more taxes.

Also, Prop. 13 should only apply to one property that people actually live in.


Mike-Crescent Park
Crescent Park
on Jul 20, 2020 at 7:22 pm
Mike-Crescent Park, Crescent Park
on Jul 20, 2020 at 7:22 pm
3 people like this

If you don’t believe in trickle down economics get ready to be convinced.

If Prop 15 passes the owners of commercial properties taxes will increase substantially. They will pass these increased costs along to their tenants In the form of lease or rent increases. Those tenants are mostly businesses. They will in turn pass the Increased costs along to their customers in the form of increased prices. Those customers are you and me.

The net is all of us will see our cost of living increase substantially. In a state where it’s already outrageous. Once it’s done it will never be undone.

There is no amount of money that is enough for our state and local governments.


CrescentParkAnon.
Crescent Park
on Jul 21, 2020 at 9:46 pm
CrescentParkAnon., Crescent Park
on Jul 21, 2020 at 9:46 pm
4 people like this

> If Prop 15 passes the owners of commercial properties taxes will increase
> substantially. They will pass these increased costs along to their tenants In
> the form of lease or rent increases. Those tenants are mostly businesses.
> They will in turn pass the Increased costs along to their customers in the
> form of increased prices. Those customers are you and me.

This is logical and reasonable to assume - if this is not done over a certain
amount of time and with some care.

But you know that over time the market and prices will adjust, so I am left
wondering why it is fine to dump huge increases on the public with the
rationale being the market will handle it, but when it comes to businesses
that doesn't matter.

Commercial real estate should not have even qualified for Prop.13 protection,
or in that case - windfall profits over time.

The tax rates should be adjusted slowly, so that businesses can adjust
their rents and consumer prices reasonably over time, but this needs to
happen. The other thing that needs to happen is to make taxes on larger
properties proportionally higher in some way, i.e progressive.

The US tax system used to give the working citizens a break by being
progressive in nature, until after so much behind the scenes corrupt
manipulations the lower income people pay more. This has been known
for 30 years or more. You can go back and search YouTube for a Firing Line
program from the 80's where the rip-off right-wing even discussed
implementing a flat tax.

The workers of the country have been so screwed over from getting less
pay to paying more taxes. This needs to be fixed towards what the
original intent of taxes were in the Constitution.

If Prop. 15 is passed and there are problems, then there will be lawsuits
and arguments on both sides, and they can be fixed, so that should
not be a reason to do nothing and just continued a bad unfair status quo.


Flat tax
Triple El
on Jul 21, 2020 at 10:48 pm
Flat tax, Triple El
on Jul 21, 2020 at 10:48 pm
1 person likes this

I like the flat tax. It’s simple and fair. And the rich would pay much more than they do now.

Complexity is the friend of the rich.


CrescentParkAnon.
Crescent Park
on Jul 22, 2020 at 7:18 am
CrescentParkAnon., Crescent Park
on Jul 22, 2020 at 7:18 am
6 people like this

YouTube - A Firing Line Debate: Resolved: That the Flat Tax Is Better than the Income Tax: Web Link

Among the subjects discussed in this very good debate is that the Flat Tax is not any simpler than what we have today, and it is a lot more regressive - meaning it gives lots and lots more money to plutocrats and we are only even seeing this mentioned because of the power of money in politics.


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