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April 22, 2024
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Proposed California Split Roll Property Tax Could Cost the Commercial Real Estate Industry $9 Bil/Year


By Rex Hime

There has been a lot of activity on Split Roll Property Tax in California this year. The proponents of removing Proposition 13 protections from commercial property have opened up several paths of attack, including an effort to gather signatures for a proposition, introducing a bill in the State Legislature, funding of a full media effort, and aggressive efforts to get city councils and school boards to endorse these efforts.

We at CBPA are doing everything we can to track all of these efforts and push back. However, there is too much ground to cover so we are also asking that you, as potentially impacted members of the commercial real estate industry, help us in a grassroots effort to meet these threats and challenges.

As leaders of our industry, we simply ask that you be aware of what is happening so you can educate colleagues, clients, tenants, and policymakers that you know about the negative impacts that a split roll property tax would have on property values, leasing rates, jobs, and economic activity.

In the State Legislature, Senator Holly Mitchell (D-Los Angeles) and Senator Loni Hancock (D-Oakland) proposed a Senate Constitutional Amendment (SCA 5) that if passed with a two-thirds vote of the Legislature, would create regular ongoing reassessments of commercial and industrial property, starting with the 2018-19 fiscal year. However, in a clever move to try to keep some business-oriented groups from opposing the measure, SCA 5 retains tax caps for certain revenue generating residential property and agricultural property.

Proponents have also included an exemption for property taxes under $500,000 of tangible personal property used for business purposes, in order to claim that the new tax scheme would not harm small businesses. We absolutely disagree since this threshold is so low, it will only filter out the tiniest of properties – while at the same time enacting a $9 billion tax increase that will hit any small business renting space in just about every commercial property in the state.

SCA 5 needs to be approved by a two-thirds majority of the Legislature. The Governor’s signature is not required. The measure would then be placed on the November 2016 ballot. The main reason split roll proponents are pushing this Legislative route – even though its success seems very unlikely – is that it would allow the measure to get on the ballot without having to spend time and money gathering signatures.

However, you have the ability to help stop this madness. First of all, you should be a member of CBPA. We are the first line of defense and coordination. A low yearly membership will make sure your company has at least the minimum amount of protection.

Your membership support allows CBPA to be part of the leadership at the Californians to Stop Higher Property Taxes (CSHPT) and to be at the table with allied groups such as the California Chamber, CalTax, and Howard Jarvis, to respond to this attack on Proposition 13, through news media, social media, and direct contact with legislators. In turn we make sure you have the tools to engage in the effort to protect yourself.

With those resources we recommend that you talk to anyone that will listen about how a $9 billion tax increase will hurt your business. Tell local officials what unpredictable taxes on your properties will do to your ability to remain viable and keep tenants.

If you are already a member of CBPA and want to do more to help, please donate to the effort to fight the inevitable proposition. For this effort we have created the CBPA-Issues Pac where every dollar you contribute is being used to fight split roll tax.

Our industry is being targeted at for $9 billion in ongoing yearly taxes. If we can just raise one percent of that amount to protect ourselves we can be successful. How much would a split roll impact your portfolio? Isn’t it worth just one percent of what an ongoing increase would cost you in a single year to stop it? The return on this investment is potentially very high!

Rex Hime is the President and CEO of the California Business Properties Association. CBPA is the “Recognized voice” of the retail, commercial and industrial real estate industry in the state of California. For more information please visit,

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