Many California business owners are facing increased lease rates, if the proposed November 2020 Proposition 15 ballot initiative passes.
All residential, agricultural and commercial properties in California are currently governed by Proposition 13, which provides for all properties to be assessed based on value at transfer of ownership or based on 1975 values with annual capped rate increases.
Proposition 15 proposes that the vast majority of commercial properties (including retail, industrial and office space) will be taxed at current fair market rates. This measure may raise an additional $12 billion annually, where 60% of these funds will go to local governments and the remaining 40% to community colleges and K-12 schools. Santa Clara County may receive $265,000,000. There are some exemptions, including those property owners with less than $3,000,000 in holdings. Proponents of the initiative make it sound like big property owners are going to be hit hardest.
Many commercial tenants have a triple net lease, where property tax increases are passed directly to the tenant. Opponents of this measure also feel that whether or not a triple net lease is in place, property tax increases will be passed on to tenants in one fashion or another. A landlord recently mentioned it could nearly double the rent for a tenant.