Fire-Suppression Equipment, Improvements to Bolster Access for Disabled Would be Taxed Under Prop 15; List of Unintended Consequences to Largest Property Tax Increase Grows
SACRAMENTO, CA – The list of “unintended consequences” of Proposition 15, the largest property tax in California history, continues to grow. Not only will this measure tax the trees that grow our food and large-scale solar facilities needed to help the state meet its climate goals, but this poorly drafted measure also increases taxes for businesses investing in critical fire suppression equipment and improvements to ensure access for the disabled.
“In an attempt to fix what they call a ‘drafting error,’ union-backed lobbyists drafted a blatantly unconstitutional, last-minute bill to exempt solar from being taxed,” said Rex Hime, president and CEO of the California Business Properties Association. “Unfortunately, it seems like other critical services, such as installing fire sprinklers in businesses and making shopping more accessible for disabled Californians, did not get the same special treatment and will trigger reassessment should Prop 15 pass.”
According to the California Assessor’s Association, the Legislature’s last-minute bill to exempt solar from Prop 15’s higher taxes is unconstitutional. Under Prop 13, approved by 65% of California voters in 1978, real property is not reassessed at fair market value unless it changes ownership or is “newly constructed.” But, Prop 15 would require that all commercial and industrial property “that is not otherwise exempt” (emphasis added) will be assessed at its full cash value as of January 1, 2022.
Unless Prop 15 is defeated, the concept of “new construction” and “change of ownership” are eliminated as those terms are applied to commercial and industrial property. As a result:
- Fire suppression systems and fire-related egress improvements will be taxed. Following Prop 31’s passage in 1984, the Legislature passed what is now Revenue & Taxation Code section 74, which excluded these additions and structural improvements from property taxation until such time as the property changed ownership, at which time their value would be captured in the “full cash value” of the property.
- Improvements to make commercial and industrial property more accessible to persons with disabilities will similarly be taxed. Following Prop 177’s passage in 1994, the Legislature passed what is now Revenue & Taxation Code section 74.6, which excluded these additions and structural improvements from property taxation until such time as the property changed ownership, at which time their value would be captured in the “full cash value of the property.”
“The practical effect of Prop 15 will mean that disabled access improvements and fire-suppression systems will be subject to property tax reassessment at their full market value as of January 1, 2022. These original measures were passed to create an incentive for people to invest in their property to make them more fire-safe and to comply with the Americans with Disabilities Act. Prop. 15 eliminates those incentives and in fact punishes people for making those investments,” added Tom Bordonaro, Jr., county assessor for San Luis Obispo County. “Call it an unintended consequence, a drafting error or intentional, Prop 15’s tax impact will be broad, deep and harmful throughout all of California.”
ABOUT NO ON PROP 15 – STOP HIGHER PROPERTY TAXES AND SAVE PROP 13
No on Prop 15 – Stop Higher Property Taxes and Save Prop 13, a bipartisan coalition of homeowners, taxpayers, and businesses, has been fighting to protect Prop 13 and oppose a split-roll property tax for more than a decade. For more information, please visit www.NOonProp15.org.