The July Report
July 26, 2019
Fight for Prop 13!
In addition to the split roll initiative that is on the November, 2020 ballot, there is also an overall effort to undermine Prop 13, and an intent to remove its protections from both residential and commercial properties. Thus, the California Business Roundtable has launched an educational effort to let everyone know the true facts about Prop 13. A first set of mailers have gone out in Los Angeles County and there is a website with a great deal of information about Prop 13 and its 40-year history of protecting all Californians.
Under Prop 13, general property taxes for both residential and business properties are calculated based on 1% of the purchase price. Annual increases in property valuations are capped at 2% per year, which helps provide certainty to homeowners and businesses that they will be able to afford their property in the future. Prop 13 also benefits renters, small businesses and all Californians by preventing skyrocketing increases in property taxes that get passed along to tenants and consumers in the form of higher rent and higher costs for goods and services. The key point is that the elimination of Prop 13 protections will increase the cost of living for all Californians.
Take Action NOW! Go to FightforProp13.org, and review it in detail and take action by joining the coalition! NAIOP SoCal has joined! The link is also posted on the NAIOP SoCal website under Legislative Action on the Home Page!
Detailed Verbal Report on Split Roll to be Provided
On the Split Roll front, a verbal report will be provided on the path to defeating the November, 2020 initiative. However, the key to victory is a well-funded and supported campaign! It is time now to budget contributions in 2019 and 2020! Contribution forms are available at the meeting.
Los Angeles County Private Arts Fee/Tax Update
As mentioned in the past, Los Angeles County has proposed a 1% fee/tax on the building valuation of new construction. NAIOP SoCal has been working with a coalition of residential and commercial real estate groups on this issue, and were able to get the draft ordinance to exempt projects valued at $750,000 or less, instead of the originally proposed $500,000 threshold. Additionally, the threshold amount will increase each year by the CPI. We were also able to get the requirement that the developer would be mandated to hire an arts consultant removed. Numerous other amendments have been proposed, but have not been put into the ordinance as yet. We will be continuing to work on getting further amendments right up to the Board of Supervisors hearing on July 23. We have also met with all the Board offices, and, unfortunately, it does appear this fee/tax will be approved. A verbal report on what occurs at the Supervisors hearing will be provided at your Board meeting.
Two-Thirds Majority Vote on Tax Increases in Jeopardy
Prop 13 and Prop 218 clearly state a two-thirds majority vote of the electorate is required to raise taxes. Yet, in a 2017 case that had nothing to do with the voter thresholds, the California Supreme Court threw in some language, usually called dicta, that raised the idea that if a tax increase was put on the ballot by a citizen initiative, as opposed to a governmental agency, then maybe only a simple majority vote was needed.
San Francisco decided to use that case to say a tax put on the ballot by a citizen initiative, but did not get a two-thirds vote, still had passed, and they began to collect the tax. A lawsuit was filed, which CBPA is part of, challenging the idea the initiative could be deemed approved by a simple majority. Unfortunately, the San Francisco based trial judge ruled in favor of the city, upholding the approval of the initiative. This ruling was immediately appealed. Regardless of what the appellate court may decide, we fully anticipate this issue will end up being decided by the State Supreme Court. Your legislative affairs staff will continue to follow this case closely.
ALERT – California Retirement Savings Program (CalSavers) Effective July 1, 2019
State law now requires nearly ALL businesses in California over the next three years to either provide a retirement savings account or register for the new State CalSavers program. The deadline for businesses to register for the program is based upon the employer size:
- More than 100 employees – June 30, 2020;
- More than 50 employees – June 30, 2021;
- 5 or more employees – June 30, 2022.
Although it is called a voluntary program, the employee is automatically enrolled in the program and 5% of the employee’s gross pay must be deducted from their paycheck unless the employee opts out. Also, for those employees who opt out, every two-years they are automatically reenrolled and will again have to opt out. The employer is responsible to maintain a list of their employees with CalSavers, and deduct and remit the withholding.
Please contact your HR department to make sure you comply with the new law and to obtain all the details regarding this new program. More information is available on the CalSavers website at CalSavers.com.