California Propositions – Here are the propositions related to real property that will be on the ballot.
Proposition 15: Increase commercial property taxes for education funding
Summary: Amends the constitution to allow commercial and industrial properties to be taxed at their market value rather than their purchase price. There are exceptions for properties zoned as commercial agriculture and companies valued under $3 million. This proposition would revise 1978’s Prop 13, which requires all California properties (residential and commercial) to be taxed at their purchase price with an annual increase of 2% or inflation, whichever is lower. Of the new tax revenue, an estimated $8 billion to $12.5 billion a year, 60% would go to local governments and 40% to school districts and community colleges. Residential properties (i.e. homes) are not affected by this proposition.
Argument for: California companies like Chevron and Disneyland sit on extremely valuable property, make lots of money and don’t pay taxes on their land’s market value. Plus, schools desperately need the funding.
Argument against: The massive tax increase will prompt companies to flee California at a time when businesses are already struggling.
Supporters: Dozens of Democratic lawmakers, several California school districts, California Teachers Association.
Opponents: Several local chambers of commerce, Ted Gaines (Republican on the CA Board of Equalization), and several local branches of the NAACP.
Proposition 19: Changes certain property tax rules – Sponsored by California Association of REALTORS® (C.A.R.)
Summary: Changes some of the tax assessment rules on property transfers by homeowners 55 or older or those who have lost a home in a natural disaster. Those homeowners would be able to transfer their tax assessment to a more expensive home three times (instead of the currently allowed one time) with an upward adjustment. It would also eliminate one exemption that exists when someone transfers a home to a child or a grandchild; if the recipient doesn’t use the home as their primary residence, its tax value would be reassessed under Prop 19. The resulting revenue would go to establishing a Fire Response Fund.
Argument for: Empty nesters aren’t putting homes on the market to downsize because they fear paying higher taxes on a new house. It also closes a loophole that allows wealthy people to pass on homes to children who use them as rental properties.
Argument against: The proposition, largely backed by real estate special interests, eliminates one loophole, but it creates a bigger problem by allowing wealthy homeowners to continue reaping the benefits of Prop 13 from 1978, writes the Mercury News/East Bay Times editorial board. Plus, revenue from property taxes shouldn’t be automatically earmarked for fire suppression.
Supporters: California Association of REALTORS®
Opponents: Howard Jarvis Taxpayers Association, newspaper editorial boards including San Jose Mercury News, East Bay Times and Orange County Register.
Proposition 21: Rent control overhaul
Summary: Allows local jurisdictions to put rent control in place for all kinds of housing, including single family homes, condos and townhomes. There are two exceptions: if the home or building is newer (first occupied in the past 15 years) and if the landlord only owns up to two properties. This proposition would replace the Costa-Hawkins Rental Housing Act of 1995. Under Costa-Hawkins, landlords can raise rents after a tenant moves out, but Prop 21 would put a limit on how much they can raise the rent of a vacated unit to 15% over three years.
Argument for: Renters need more protections in California’s expensive housing market and the proposition would allow local governments the ability to expand more of those protections.
Argument against: More rent control could worsen the housing crisis by reducing private builders’ profit incentive to build more housing.
Supporters: The California Democratic Party, Sen. Bernie Sanders of Vermont and Michael Weinstein, president of the AIDS Healthcare Foundation who has funded rent control campaigns in the past.
Opponents: Several trade unions, real estate groups, veterans groups and more.