In This Issue:

• ***RED ALERT*** TWO SPLIT ROLL INITIATIVES FILED BY TEACHERS ASSOCIATION

• SPLIT ROLL STUDY SHOWS NEGATIVE IMPACTS

• PUBLIC SUPPORTS PROP 13 BUT WE MUST ENGAGE PUBLIC DEBATE

• INDUSTRY PREPARES FOR THE BATTLE AHEAD ON SPLIT ROLL

• YOUR HELP TO DEFEAT SPLIT ROLL IS NEEDED!

• SPLIT ROLL INITIATIVE SUMMARY 1: INCREASE TAX TO 1.55%

• SPLIT ROLL INITIATIVE SUMMARY 2: CONTINUAL REASSESSMENT

• CBPA 2010 CALENDAR

***RED ALERT*** TWO SPLIT ROLL INITIATIVES FILED BY TEACHERS ASSOCIATION

The hammer finally dropped and two initiatives have been filed for Title and Summary with the Attorney General’s Office to change Proposition 13 and end tax protections for commercial real estate by enacting a Split Roll Property Tax. Multiple sources report that the California Teachers Association (CTA) is the source for both of these measures.

These two initiatives join one other measure introduced last month, and come after our industry has successfully defended Proposition 13 in several different venues in the past year, including legislative measures, in the state budget, and at the Tax Commission.

One of CTA’s measures increases all commercial property taxes by more than half by adding a .55% tax on top of the existing 1% tax. The other requires continuous reassessment and bases taxation on current value.

Both measures have political “sweeteners” thrown in to ostensibly make the campaign easier, like doubling the homeowners property tax exemption, doubling the renters tax exemption, and increasing the types of agricultural properties that are not subject to the commercial assessment.

One of the measures contains a whole litany of “benefits” to education, meant not only as a way to fully control the monies, but also as rhetorical devices for the campaign (“vote for Prop X to increase class size reduction and improve school safety!”).

See below for highlights of the provisions and links to read the full measures.
 

SPLIT ROLL STUDY SHOWS NEGATIVE IMPACTS

If you have any doubt about the negative impacts of a split roll, please see this study that examines the potential economic impacts by taking into account how a split roll would affect the behavior of individuals and businesses who own commercial property. Click here to read the study entitled "The Economic Effects of California Adopting a Split Roll Property Tax."
 

PUBLIC SUPPORTS PROP 13 BUT WE MUST ENGAGE PUBLIC DEBATE

Although third party non-partisan polls consistently show that voters support Proposition 13’s protections, we have seen in the past that an advocacy group with a lot of money to spend can move opinion.

Recently several of these groups have said that internal polling and focus groups show voters are receptive when presented with arguments to raise property taxes only on business and/or remove the 2/3’s threshold protections to raise taxes. However, we doubt these focus groups have been presented with arguments pointing out the economic impact of such actions and that California already has among the highest state sales tax, income and gasoline taxes, and corporate taxes, in the nation.

This, however, goes to show that defeating these propositions is not a slam-dunk. We must, as an industry, raise funds and get our message and arguments out to voters. If we can keep the broader public debate honest and accurate we will succeed, but doing that takes a lot of time, effort, and most importantly, funding.
 

INDUSTRY PREPARES FOR THE BATTLE AHEAD ON SPLIT ROLL

Although this is the beginning of the official process, we are already taking actions to prepare for the battle, such as meeting with those responsible for writing the ballot analysis, analyzing the economics of the measures, formulating an opposition campaign, and fundraising.

In addition to these three measures, we could also see split roll measures from another public employee union and from the SF Assessor Phil Ting led group “Close the Loophole,” which was registered this year specifically to pursue a proposition.

These measures seek ways to allow California State Government to continue spending taxpayer dollars without addressing issues of overspending and fixing the structural deficit.

We are also part of the leadership team for the group “Californian’s Against Higher Property Taxes,” that is a broad based coalition of real estate groups, small business, and taxpayer advocates. Click here for more information.
 

YOUR HELP TO DEFEAT SPLIT ROLL IS NEEDED!

These are clear and present dangers to anyone who owns or leases commercial property in this state and we ask that you help us with your talent or your treasure and/or at the very least that you help us make others aware of this oncoming attack and ask them to stand against, and defeat these ill-conceived ideas. For more information about how you can help, contact us by replying to this email.

SPLIT ROLL INITIATIVE SUMMARY 1: INCREASE TAX TO 1.55%

Dubbed the “EDUCATION AND TAXPAYER FAIRNESS ACT” was submitted to the CA Attorney General’s Office for Title and Summary on November 5, 2009.

ENACTS A SPLIT ROLL PROPERTY TAX
* By adding a new .55 percent ad valorem property tax (on top of existing 1% tax) to the “full cash value” of non-exempt non-residential property (commercial property).

To make the tax increase on businesses more palatable the measure also does the following:

* Doubles the homeowner property tax exemption from $7,000 to $14,000.
* Doubles the Renters’ Tax Exemption.
* Exempts first $1,000,000 of personal property tax to “protect small businesses.”
* Exempts property that is zoned and used for “agricultural production” (expands current ag exemption).
* Exempts all residential properties including multi-family.
* Money bypasses State’s General Fund and goes directly to “Public School Investment and Accountability Fund” for distribution to K-12 districts (78%), Community Colleges (11%), and CSU (11%). University of California does not receive any funds.
* Funds are specifically directed to be spent on class size reduction, instructional supplies & equipment, school librarians/nurses/counselors, staff development for teachers designed by teachers, to provide for planning time for teachers, art/music/vocational programs, increased compensation for teachers, and school safety.
 

SPLIT ROLL INITIATIVE SUMMARY 2: CONTINUAL REASSESSMENT

This one, dubbed “PROTECT HOMEOWNERS AND CLOSE CORPORATE TAX LOOPHOLES ACT” was also submitted to the CA Attorney General’s Office for Title and Summary on November 5, 2009.

ENACTS A SPLIT ROLL PROPERTY TAX
* By mandating an immediate reassessment of non-exempt non-residential property (commercial property).
* Mandates a reassessment of commercial property a least every three years.
* The “full cash value” becomes the new “fair market value.”

To make the tax increase on businesses more palatable the measure also does the following:
* Exempts property that is zoned and used for “agricultural production” (expands current ag exemption).
* Exempts first $1,000,000 of personal property tax to “protect small businesses.”
* Doubles the homeowner property tax exemption from $7,000 to $14,000.
* Doubles the Renters’ Tax Exemption.
* Gives counties cut of new tax revenue to pay for administrative costs of reassessments.
* Gives counties 10% of these tax revenues after assessment expenses.
* Revenue goes directly to state General Fund – does not direct how funds are spent.
 

CBPA 2010 CALENDAR

February 18, 2010
CBPA Board Meeting
Sacramento

June 22-23, 2010
Annual CBPA Board Meeting & CA Commercial Real Estate Summit
The Hyatt Regency, Sacramento

October 21, 2010
CBPA Board Meeting & CBPA Industry Awards Dinner
The Fairmont Hotel, Newport Beach