The September Report
September 6, 2018
Split Roll is on the 2020 Ballot – Fight is On!
The time has now come when we must all actively work to defeat the number one threat to our industry, and really the entire business community in California – Split Roll. Recently, a group of public employee unions, progressive activists, and community groups submitted a sufficient number of signatures to place a split roll initiative before voters on the November 2020 ballot. The official title for the initiative is “The California Schools and Local Communities Funding Act”. We will have to see how the actual ballot question comes out, but it is clear the pro side is going to push an emotional campaign about saving the kids and schools, and local public services without any reference to the dire economic consequences of the measure.
This measure, if passed, requires immediate reassessment of all your commercial, industrial, and retail properties, with regular reassessments every three years after that. Your ability to know your property taxes well in advance will vanish and you will be hit with double digit increases, millions upon millions of dollars, like we see in other states that don’t have the protections of Prop. 13.
A broad-based coalition is in place to fight the initiative. The coalition includes the California Business Properties Association (CBPA), the California Chamber of Commerce, California Taxpayers Association, California Business Roundtable, Howard Jarvis Taxpayers Association, and a growing list of regional and local business and taxpayer advocates. The coalition is called the “Californians to Stop Higher Property Taxes”. Access their website www.stophigherpropertytaxes.org for more detailed information.
No matter what your businesses connection is to the commercial real estate community, no matter how far removed you may feel from this issue, and even if you have never actively engaged in a political fight or campaign, now is the time for everyone to step up and be aggressively involved in defeating this devastating measure. So, let’s all of us make a difference here and do what we can to stop this initiative. There really is no option.
On the November 2018 Ballot Piling on the Taxes!
LA County Stormwater Parcel Tax Proposal – Measure W
The Los Angeles County Board of Supervisors did vote to place another brand-new parcel tax on the November, 2018 ballot. This time they will charge you 2.5 cents per square foot of the impermeable space on your property located within the County jurisdiction and any of the 88 cities in the County. Over 2 million parcels! NAIOP and many other business organizations attempted to work with the County to create some plan that might achieve the stated goals of cleaning up the storm water runoff and generate more local water supply. Unfortunately, the county refused to do so. It remains unclear how much the County may even charge you, but they say “don’t worry as you can file an appeal if you don’t like what number they come up with”. Plus, it is unknown what the tax money might actually go towards. Not one project is
listed. No plan is set out. There is no indication as to when any project might be built or what it will cost. The County is merely saying, “Give us the money and we’ll figure out what to do with it later.” This is not acceptable. It must be remembered the County just hit you with a parks parcel tax in 2016, and are discussing more possible increases for the 2020 ballot. When will it stop? Now is the time to say ENOUGH IS ENOUGH! There is an organized campaign to stop this measure from passing. It must be remembered this parcel tax requires a 2/3rds majority vote to pass, and it is felt this November’s ballot provides an excellent opportunity to defeat the measure. We will be asking all NAIOP SoCal members to contribute to the No campaign. Watch for more information on how to contribute. For more information contact Peter Herzog, Assistant Director of Legislative Affairs, at 949-380-3300 or email@example.com.
Arts Fee/Tax Proposed in Los Angeles County and City of Anaheim
And if the above wasn’t enough, LA County also wants to hit you with a proposed public arts tax. The amount of the art tax would be 1% of the building valuation. In general, the arts tax would apply to all new commercial projects with a building valuation of $500,000 or more, as well as all commercial repair and renovation projects of the same value. “Building valuation” is defined as the “total value of all construction work for which a building permit is issued…” The developer could either build a piece of art, cultural facility, conserve or restore current art or provide artistic or cultural services, or pay an in-lieu fee. A developer would be required to hire a “professional art consultant” to oversee the art project “from inception to completion.” The developer would not be issued a building permit until the County has approved an art proposal or you have paid the in-lieu fee. You also could not get a certificate of occupancy until the Arts Commission determined the art project was in compliance with the requirements of the ordinance. So, in addition to the added cost, this would add at least three more steps in getting a project built and occupied, further complicating an already difficult process in LA County. This tax will only be levied on commercial real estate. When asked why they excluded residential property, the County said it was because it would increase the cost of housing and create opposition to the proposal. Well, the same applies to our industry. The County claims there is some kind of “art demand” which they have not quantified, nor have they said anything about how commercial reals estate adds to any such demand. This will go before the County Planning Commission on October 31. If and when the Planning Commission approves the public art proposal, it will then go to the Board of Supervisors. NAIOP is working with other business organizations on this issue. Please provide Peter Herzog with your thoughts and concerns on this fast-moving issue.
In Anaheim Council Member Jose Moreno seems to have taken his proposed Art Fee from the Los Angeles play book. It also only applies to commercial real estate, but is a .5% fee on all commercial development projects of 25,000 square feet or greater. The fee/tax will go into a fund to pay for maintenance of existing art as well as for new art throughout the city as outlined by a Public Art Plan developed by the City Manager’s office and administered in collaboration with the Cultural and Heritage Commission. NAIOP SoCal is opposing this fee, which is in reality a tax on new commercial development. NAIOP SoCal members developing in Anaheim please contact Director of Legislative Affairs Vickie Talley for more information on this proposal, which will be headed to the City Council this month.
Requested Action to Oppose Proposition 10
The repeal of the Costa-Hawkins Act will be on this November’s ballot as Proposition 10. Many of our NAIOP SoCal members and CBPA have gone on record opposing this measure. It is recommended that the NAIOP SoCal Board approve adding its name to the organizations opposing this measure and encourage our members to vote No on 10.