In November we will have the opportunity to vote in California on the proposed split tax roll which affects the way commercial property is assessed.
Come in November here in California, voters will have to opportunity to vote on the split roll tax. What “split roll” refers to is traditionally all California real estate had a unified tax roll, commercial being assessed the same way residential is. The split roll initiative proposes changing the way commercial is assessed from residential.
The first initiative for the split roll tax for the November ballot was withdrawn so the one we are likely to vote on is the 2nd version. It has been given the somewhat deceptive title “California Schools and Local Communities Funding Act”. What it proposes is eliminating the limitation on annual increases and taxable value for commercial properties which currently caps at 2% upside a year. The change would remove the cap and allow commercial property to be reassessed on a continuing basis.
The increase in cost to business and commercial property owners is estimated to be $12 billion a year. Because most businesses lease their property, the cost would likely be passed on to the tenant and ultimately flow down to the consumer. This would remove predictability and stability of costs associated with property tax and would probably cause an initial shock that puts many companies at risk of going out of business. Advocates have also openly expressed the next step would be going after residential protections. Some examples of types of businesses that would be affected would be movie theaters, shopping malls, gas stations, supermarkets, retail stores, auto dealerships, car washes, restaurants, hotels, self-storage facilities, factories, warehouses, businesses in office buildings and strip malls.
More information can be found at https://www.hjta.org/.