Town Square

Post a New Topic

Santa Clara County supervisors vote to endorse Proposition 13 reform measure

Original post made on Jul 25, 2020

A state ballot measure that would upend decades of property tax protections for large commercial owners will soon have another proponent, after Santa Clara County supervisors voted 4-1 Tuesday to support Proposition 15.

Read the full story here Web Link posted Friday, July 24, 2020, 1:33 PM

Comments (22)

11 people like this
Posted by Local
a resident of Stanford
on Jul 25, 2020 at 2:29 pm

This will not get passed onto tenants as they are paying market rates. Anyone taking Econ 1 would know that. This will get passed on to landlords - they will pay the tax and their properties will be worth less. But this is seems fair - tax some of the huge property gains these commercial landlords made over the last 10 years and use it to fund schools.


4 people like this
Posted by TS Member
a resident of Another Palo Alto neighborhood
on Jul 25, 2020 at 2:36 pm

Question:

Does this mean that someone who owns a small house worth about $3 million in Palo Alto and rents it out will now be paying property taxes on the the market value of the property?


12 people like this
Posted by Resident here
a resident of Another Palo Alto neighborhood
on Jul 25, 2020 at 2:46 pm

@TS Member,
No, absolutely not. Residential properties will not be affected. This is only commercial and non-agricultural industrial properties.

(Plus, those with values $3M or less in holdings would continue to be taxes based on their old lower basis, but again, this tax doesn't apply to residential property, regardless of whether the homeowner is renting it out.)


Like this comment
Posted by TS Member
a resident of Another Palo Alto neighborhood
on Jul 25, 2020 at 2:47 pm

@ Resident here

Thanks for your answer. This was not clear to me.


23 people like this
Posted by CrescentParkAnon.
a resident of Crescent Park
on Jul 25, 2020 at 3:18 pm

This is a great idea, a necessity even, BUT ....

Until they explain this and have some indication that people
really know what they are voting for - I cannot support this
much as I think it is needed.

One thing is that these tax hikes need to be phased in over
some reasonable amount of time.

I would rather see all property taxes be made progressive
so people whose living quarters take up a small amount of
land pay a small amount of taxes, and big-shot billionaires
who scrape out our wonderful hills for giant complexes have
to pay multiples that those who are more environmentally
conscious pay.

We drastically need some kind of incentive to slow the growth
and destruction of our natural habitat, and put a check on
obnoxious conspicuous consumers.


21 people like this
Posted by resident
a resident of Community Center
on Jul 25, 2020 at 3:20 pm

Applying Prop 13 to commercial properties was a big mistake. Now is as good a time as any to fix this.


8 people like this
Posted by Resident here
a resident of Another Palo Alto neighborhood
on Jul 25, 2020 at 3:31 pm

@Crescent Park
I had that same concern. Read about it on ballotpedia. It IS phasing in, and the legislature seems to have discretion to lengthen the time. Maybe someone who knows more can explain.


20 people like this
Posted by Resident here
a resident of Another Palo Alto neighborhood
on Jul 26, 2020 at 12:48 pm

Not only is this phased in, the large commercial properties it affects will get that when families hit by the 2017 federal tax increases on homeowners got no lead time. Our property taxes went up $10,000/year just from that, with no phasing in, no time to adjust. It's just hard to take the complaints seriously when the percentage of property taxes covered by residents versus large companies has grown while the companies have profited mightily.


14 people like this
Posted by JC
a resident of College Terrace
on Jul 26, 2020 at 2:46 pm

Prop 13 passed containing loopholes for commercial properties which allowed commercial properties to change hands without a new property tax assessment. This is what commercial real estate lawyers specialize in.

For instance, circa 1975 Palo Alto property tax revenue was split approximately 50-50 between residential and commercial properties. Today, because of these sweetheart loopholes, residential properties pay approximately 75% of property taxes while commercial properties contribute approximately 25%. A percentage that will continue its downward trajectory without Prop 13 reform.

Many commercial property owners have had a fantastic break for 45 years charging market rates while paying relatively minimal property taxes. Especially those families who have owned large chunks of commercial real estate for generations of which we have a number in Palo Alto.


22 people like this
Posted by Mike-Crescent Park
a resident of Crescent Park
on Jul 26, 2020 at 3:08 pm

If you are giddy with joy that commercial property owners will be punished by this proposed change think again. The increased taxes are an increase in their cost of business. The increase will be passed to the leasees. And most of those leasees run businesses that have customers. The prices to those customers will be increased. Those customers are mostly you and me.

Original Prop 13 triggers a reappraisal when a property is sold or changes ownership. Real estate attorneys have found a way to game ownership. Work on that if you want change. Not wholesale market value reappraisal on everyone. That will only make the cost of living here is California more unbearable than it already is- for all of us.


32 people like this
Posted by CrescentParkAnon.
a resident of Crescent Park
on Jul 26, 2020 at 3:54 pm

Mike-Crescent Park ... price rises, or price adjustments are one of the functional ways that the free-market still works.

Prices cannot rise when people do not have the money to pay for the things ... so commercial real estate values will probably fall, prices will not go up, but it will take time for these signals to percolate through the economy.

Prices were so high the most restaurants were operating so precariously in the red zone they immediately folded under C-19. Rents should go down - it would be much better to shake out commercial property speculators than it would be to shake up restaurants and small businesses.


23 people like this
Posted by Steve N
a resident of another community
on Jul 27, 2020 at 7:44 am

Just another blow to small business owners, now having the taxes passed down to them.


21 people like this
Posted by Kathy
a resident of Greater Miranda
on Jul 27, 2020 at 10:41 am

No to new taxes. These taxes will simply be passed on to all of us as the cost of doing business. Let's recognize this for what it is --- a money grab by public employee unions at our expense.

At a time a high unemployment, financial strain, and great uncertainty, the California Teacher's Association, the California and American Federation of Teachers (the teachers unions), the SEIU, and Unite HERE (public employee unions), the principal proponents and financial sponsors of Prop 15, Web Link), which stand to benefit financially from it, wish to tax us more, in a state that is already one of the most highly taxed in the nation. Let's just recognize this for what it is ---- a tremendous transfer of money from us to unionized public employees --- as our property taxes go to cities, counties, and schools, which spend upwards of 70+% of their expenses on unionized public employees salaries and benefits - pension benefits which are unfunded and are strangling our cities, counties, and state. Take a look at the state's public schools assessment testing, Web Link, to see if you think the teacher's unions are doing a good job educating our students: only 51% are proficient in English Language Arts, and only 40% are proficient in math statewide --- and the teachers' unions work to make sure there is no accountability to remedy this state of affairs, and make sure to cripple and eliminate any competition (choice/charter schools) to its monopoly status. No to unrestrained spending on unionized public employees with no accountability. No on Prop 15.


22 people like this
Posted by Pacsailor
a resident of Another Palo Alto neighborhood
on Jul 27, 2020 at 10:59 am

Many don’t realize that the leases have changed over time to what is called net leases, meaning that the tenant pays for his/her share of the property tax, insurance and maintenance of the property. So when these properties are reassessed the new higher tax will be passed in to the tenants who will be passing it on to their customers that is us. So beware of what you wish it might come true.


12 people like this
Posted by Too bad this is poorly written.
a resident of Another Palo Alto neighborhood
on Jul 27, 2020 at 11:43 am

I'm a resident and I strongly support our public schools and strongly desire Prop 13 reform; however, this seems like a poorly written proposition. As a resident, I also support local-serving retail which will be severely impacted by this.

Gradual roll back makes much more sense to me and would deliver tax reform we need. I won't be voting for Rebecca Eisenberg who seems not to grasp the basic economics here. Larry Stone's comments, seem to me, spot on.

The devil is the details with these kinds if choices. We need strong critical thinkers with experience on Council right now. Rebecca has just demonstrated to me with her statement above that she lacks both.


30 people like this
Posted by K in MP
a resident of Menlo Park
on Jul 27, 2020 at 12:00 pm

It astounds me that people as smart as those in Palo Alto think that a tax on commercial property will not be passed down until it hits the consumer. "Big Business" is not a factory that prints money - they get it by producing a product and selling it. Taxes are a cost of doing business that just gets passed on to whoever purchases the product being sold.

And real estate prices won't fall because of the higher tax - every business is in the same boat, so they will all pass the tax along.

That is, until they get out of the "boat" and leave California for a more tax-friendly state.

We are taxing ourselves into the poorhouse. Wake up and reject this tax!


18 people like this
Posted by Jennifer
a resident of Barron Park
on Jul 27, 2020 at 3:03 pm

For apartment renters, this additional tax will be passed down to renters. I've been living in my apartment for 15 years, so my rent is below market. I doubt my landlord will continue to be so nice if his property taxes were to go up dramatically. Tons of small businesses will suffer because their leases are called triple net leases, which means they have to pay the property taxes, not the landlords. Since their leases are usually long-term, they are stuck with paying the unexpected higher property taxes that they did not factor in when they signed the lease. How will they pay for the additional property taxes? Of course pass it down to the consumers or else they can't survive! Please don't be naive thinking that renters and consumers won't be affected. There is no free lunch.


Like this comment
Posted by Vik Lowry
a resident of Midtown
on Jul 27, 2020 at 6:12 pm

Generally speaking property taxes only go up when property changes hands that includes residential and commercial. If you think that taxing only commercial businesses is going to be help money for everything, think again. It’s these commercial businesses that pay for our existing infrastructure right now. Once you start taxing these commercial businesses the land values are going to plummet and California will lose our thriving economy to no-state states that are business friendly lien Texas and Floria. Then WE will lose jobs in whatever factories, tech Compan83/ or businesses we work at!! Also Say good by to your benefits and perks!


2 people like this
Posted by musical
a resident of Palo Verde
on Jul 27, 2020 at 6:21 pm

^ Generally speaking property taxes inflate 2% every year.


9 people like this
Posted by Art Liberman
a resident of Barron Park
on Jul 27, 2020 at 7:39 pm

Rebecca Eisenberg - really?
"City Council candidate Rebecca Eisenberg said she has dedicated her career to fighting the "scourge" caused by Proposition 13" -
what have you done?


2 people like this
Posted by BruceS
a resident of Greenmeadow
on Jul 29, 2020 at 9:02 am

A question (as I'm too lazy to read the text of the proposition, though I'll probably try before the election): is the $3M limit inflation adjusted? If not, it is a big negative, at least in the long run.

Two interesting factors that I didn't see discussed here:
1. The pandemic (I would think) will hit commercial property values significantly, as a lot of businesses are failing, and office space isn't expanding with workers staying home for the duration. That will probably help with 'phasing in', though it does make for a double hit on property owners who are renting their space out.
2. In the long run, the increased tax will most likely (again IMHO) significantly reduce the value of commercial space, again a double hit on landowners, but overall for California I'm not sure a bad thing, as it might push more toward residential use, which is very much in need.


Like this comment
Posted by Anon
a resident of Another Palo Alto neighborhood
on Jul 29, 2020 at 11:06 am

Posted by K in MP, a resident of Menlo Park

>> It astounds me that people as smart as those in Palo Alto think that a tax on commercial property will not be passed down until it hits the consumer.

It depends, actually.

>> "Big Business" is not a factory that prints money

Monopolies do seem like they are able to print money, though.

>> Taxes are a cost of doing business that just gets passed on to whoever purchases the product being sold.

Sometimes they do, sometimes they don't. It all depends on-- everything. Market conditions, overall economic conditions, the competition, and so on and do forth.

>> And real estate prices won't fall because of the higher tax

Actually, often they do. But, higher taxes often get passed on to customers. It all depends.

>> That is, until they get out of the "boat" and leave California for a more tax-friendly state.

We have too many jobs -right here- anyway. It would be nice if some of those jobs moved to areas where it is possible to build new housing more affordably. Tracy Hills, for example: Web Link


>> We are taxing ourselves into the poorhouse. Wake up and reject this tax!

The real reason that I posted: you assume that if governments *can* raise taxes, they *will* raise taxes. I don't blame you-- some proponents are arguing this way, too. But, -leveling the playing field- doesn't have to mean raising overall revenue. It could, but, it doesn't have to. I am definitely in favor of leveling the playing field.


Don't miss out on the discussion!
Sign up to be notified of new comments on this topic.

Email:


Post a comment

In order to encourage respectful and thoughtful discussion, commenting on stories is available to those who are registered users. If you are already a registered user and the commenting form is not below, you need to log in. If you are not registered, you can do so here.

Please make sure your comments are truthful, on-topic and do not disrespect another poster. Don't be snarky or belittling. All postings are subject to our TERMS OF USE, and may be deleted if deemed inappropriate by our staff.

See our announcement about requiring registration for commenting.


Get the most important local news stories sent straight to your inbox daily.

Former Flea St. Cafe chef starts meal delivery service
By Elena Kadvany | 1 comment | 6,909 views

10 ways to reduce your dog's "pawprint"
By Sherry Listgarten | 9 comments | 4,482 views

Why can't high schoolers write?
By Jessica Zang | 13 comments | 2,748 views

"Plant an Expectation, Reap a Disappointment"
By Chandrama Anderson | 1 comment | 1,900 views

'Ignoring what's wrong has never made anything right'
By Diana Diamond | 4 comments | 1,274 views

 

Benefiting local non-profits

The 36th annual Moonlight Run and Walk is Friday evening, October 2, wherever you are! Proceeds go to the Palo Alto Weekly Holiday Fund, benefiting local non-profits that serve families and children in Santa Clara and San Mateo Counties. Join us under the light of the full Harvest Moon on a 5K walk, 5K run, 10K run or half marathon.

Register Today!