2020 LEGISLATIVE PROPOSALS
Good or Bad These Affect You
This bill has been proposed to split commercial real estate holdings over $3 Million dollars from the 1978 Prop 13, to be reassessed at current market value and reassessed every 3 years after that. This looks to generate between $8 - $12.5 Billion in funds 40% would be used for schools, focusing on K-12 and Community Colleges the 60% balance would go to special districts and local governments. The tax base is currently assessed at the value of the property at the time of purchase with year over year increases matching the rate of inflation up to 2%.
One of the biggest issues with this bill, that the opponents are pointing out: This offers no small business protections. 80% of CA small businesses rent a space in the commercial properties owned by these large real estate holding companies, as we have seen over and over again this increase will be passed on to the small business owners already struggling with the cost of CA rent and having to pay an unfair share of the struggling commercial space we already see. Add this to the currently strained commercial real estate market being crippled by Covid - 19 and the fall out of this could be devastating for small business, the backbone of the economy and jobs.
My Opinion: We as a country, CA being a leader, absolutely need to do better with our education system. We do need to get more funding to the schools, however, as is this bill would cripple small businesses. In a time that even the large commercial real estate companies are failing and out of money, and our small business community holding on by a breaking thread, now is not the time to propose such a heavy tax burden to some of our most at risk patriots that shape our communities with their unique touch and vision of a small marketplace. No one is going to win in a battle between small businesses and the education system, they are both in trouble.
Part 1: This would allow homeowners over the age of 55, disabled or natural disaster victims to transfer part of their tax base with them when they sell their home and purchase a more expensive home. It would also increase the number of times a tax base can be transferred, currently this can only be done 1 time.
Part 2: It would also create a constitutional amendment to prevent people who inherit properties with a market value under $1 Million to keep the low tax base unless they are going to keep the home as their primary residence. The revenue from this would go to help fund wildfire agencies. Schools would gain $10s of Millions in dollars in tax revenue. Over time this would creating $100-$200 Million in overall tax revenue for local governments per year.
My Opinion: This is one I am very torn on, we certainly see the need for funding in wildfire relief and that is an issue that does affect housing as we sadly see play out time and time again as lives and homes are lost every wildfire season. However, it is certainly a tax. I am generally for this, as I believe the benefits outweigh the negatives proposed in the bill. However, that is contingent upon money in fact stay earmarked for wildfire relief and we keep the protections for the specific groups proposed. Although I am never a fan of lowering the inheritance created by a family over a lifetime, those who intend to continue living in the home are protected. This would apply more to people keeping a home with the intent on using it as an investment property, though I am largely against additional taxation, this is targeted at investment property that can better absorb the tax and would aim at updating the tax base to current levels under these circumstances.
Replacement of the Costa-Hawkins Rental Housing Act/Rent control: This bill, largely funded by the AIDS Healthcare Foundation, this measure would allow local governments to establish rent control on residential rental properties over 15 years old and would allow for limits on annual rent increases to differ from the current statewide limits. Would allow rent increases of up to 15 percent over 3 years for new tenants. Landlords who own 2 or less homes would be exempt.
This is expected to reduce state and local revenues in the high $10s of millions a year depending on the actions of local communities. This would create a huge revenue loss.
Those for this bill argue that this will help curb the increase in homelessness and the affordability crisis in California, many households are seeing 50% and even more of their income going towards rent for housing.
Arguments against it point out that voters have overwhelmingly rejected rent control multiple times already and that we need to focus on creating more affordable and accessible housing options.
My Opinion: I see people push their budget to heartbreaking levels everyday, leveraging tomorrow for todays stability. Additionally, no one can deny the uptick in homeless Californians, many of whom are employed full time and still simply unable to afford to keep a roof over their head. Rent control is a very well meaning, but misguided solution. We have seen this play out many times. Looking to areas that have imposed it, say New York for instance, there is a rampant issue with homes and entire developments becoming run down, failing to meet even basic standards of safe and sanitary housing. Rent largely covers the cost of a rental property, mortgage, insurance, taxes, maintenance. It is easy to think the owner of said building is wealthy and can afford to take the hit as a cost of business…the unfortunately reality is many times that is not the case. Many times landlords are barely covering expenses let alone making a profit. When the stagnant rents stop covering the rising costs and the landlord slips into not making ends meet, the quality and standard of the building starts to suffer. The money simply isn’t there to make necessary repairs, landlords stop putting extra money into non-necessities and barely maintain what they do have to. This then slowly turns into rentals going into default and no one wins in the end.
My personal belief is this is a well meaning, but miss guided approach. The reason hosing costs are so high is simple, we don’t have enough of it. Development has become so restrictive and regulated it has almost stopped. Coupled with long term residents who don’t want to see their neighborhood adapt and change to the current times and allow for higher density. This is the cause of our housing crises. We need to focus all this time, money and efforts into creating more housing options for the over abundance of people. Even if we did lower the cost, the root problem and what has caused the high prices, is that there is not enough housing to begin with. We need to fix that root issue to see a relief in rental prices and housing as a whole.