The California Assessors’ Association has come out in opposition to a recently qualified November ballot initiative that would change Proposition 13 to require the reassessment of many commercial and industrial properties to current market value.
In a letter to state lawmakers, CAA President Don Gaekle, assessor for Stanislaus County, cited the “immense anticipated statewide implementation costs and complexities, as well as the disparate impacts to the various California counties as the reasons the assessors felt “compelled” to oppose the measure that proponents have named The California Schools and Local Communities Funding Act of 2020.
Santa Clara County Assessor Larry Stone told lawmakers during an informational hearing on June 4 that the California Assessors’ Association completed a comprehensive analysis of the so-called “split roll” initiative with the goal of answering one question: Can assessors implement the initiative?
“Our conclusion is we cannot,” he testified, “It would be impossible — not difficult, but impossible — to administer all of the provisions of the measure as it is written.”
The assessors’ concerns fall broadly into three categories: cost, staffing and exemptions.
The cost to implement the initiative, according to the assessors’ analysis, is projected to be about $1 billion during a three-year phase-in period, not counting an estimated 36 percent increase in costs in related government offices such as county controllers, tax collectors, assessment appeals boards or county counsels. The cost estimate also does not include likely salary increases needed to recruit and retain hundreds of new professional appraisers.
Although the counties are supposed to be reimbursed for implementation costs from the additional tax revenue, the CAA says it isn’t clear that all the extra expenses will be reimbursed, and it further notes that some small and rural counties will see less revenue, not more, because of exclusions and offsetting tax breaks.
Beyond the cost and staffing concerns, the assessors warned that the split-roll measure contains exclusions and exceptions that are “impossible” to implement. For example, commercial property valued at $3 million or less would not be reassessed to market value under the measure as long as “none of the entity’s owners have a cumulative fair market value in excess of $3 million adjusted every 2 years, starting in 2025, by a floating inflation factor” that will vary from county to county. This information is not readily available in any database.
Additionally, a temporary deferral until 2025 of new assessment provisions applies to commercial and industrial property where 50 percent or more of the occupied square footage is occupied by “small business,” defined as having 50 or fewer annual full-time employees and “not subject to control, restriction, modification or limitation by an outside source, individual or another business,” a condition difficult if not impossible for assessors to verify.However, for all the effort to exempt small businesses from reassessment and higher taxes, any small business that leases space from a larger business and has a “triple net lease” will be paying the higher property taxes that are imposed on the property owner. That’s a higher cost for small businesses, there’s no way around it.
The California Schools and Local Communities Funding Act is an ill-advised effort to replace Proposition 13 with a new patchwork of higher and unpredictable property taxes for California businesses.
In the words of Santa Clara County Assessor Larry Stone, “This is a seriously flawed ballot measure, and it should be defeated.”
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June 12, 2020 at 01:07AM
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Split roll measure not only a costly job-killer, but difficult to implement - OCRegister
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