New Ad Underscores Potential Extraordinary Property Tax Increases on Small Businesses During Pandemic
SACRAMENTO, CA – For the second time in less than a week, proponents of Proposition 15, the largest property tax hike in California history, have mischaracterized the significant harm their flawed initiative would impose on small businesses. The ad falsely claims one of the businesses portrayed would receive “a tax cut” when in fact the owners would be subject to a significant property tax increase through their lease agreement if Prop 15 is not defeated in November.
The ad features three small business owners. One of the small business owners depicted in the ad, Celia, who owns South LA Café with her husband Joe who is also in the ad, looks directly into the camera and says, “I’ve run the numbers and it will cut my taxes, just like many other small business owners.” However, according to the Los Angeles County Assessor’s file, the property, which is located at 3991 S. Western Ave. in Los Angeles, has a base tax year of 1994 with an assessed value of $5,644,583, well-exceeding Prop 15’s $3 million threshold to trigger fair market value reassessment. The complicated rules to review and approve which businesses would be subjected to a higher property tax, coupled with the lack of coordination with all counties and the implementation cost of well over $1 billion are several of the reasons why the California Assessors’ Association opposes this massive property tax hike.
“Clearly, the owner of the café in question should ‘run the numbers’ again because it appears that she and her husband will face a whopping new tax bill at a time they – and many other small businesses – can least afford it,” said Michael Bustamante, spokesperson for the No on Prop 15 campaign. “How will a small business owner or a county assessor figure out how to accurately assess the property tax that will be levied under Prop 15 when the authors of the largest property tax hike in California history can’t get it right? This ad is the second time in less than a week that proponents have gotten it wrong. Proponents either do not understand what’s in their own initiative or are intentionally trying to mislead voters by mischaracterizing the devastating impact Prop 15 will have on California’s small businesses.”
South LA Café is part of a larger property parcel and will share an annual property tax increase of between an estimated $87,922 and $155,059 with other tenants located in the Western Ave. strip mall in the first year alone – an amount that will likely increase in future years. According to property records, the strip mall’s tenants have what is known as a “triple-net lease,” meaning the tenants, as a part of their lease agreement, would be responsible for paying any increased property taxes under Prop 15.
According to the initiative language,“…real property that would otherwise comply with the exclusion set forth in paragraph (1) of this subdivision shall be subject to reassessment pursuant to paragraph (1) of subdivision (a) if any of the direct or indirect beneficial owners of such real property own a direct or indirect beneficial ownership interest(s) in other commercial and/or industrial real property located in the State, which such real property in the aggregate (including the subject property) has a fair market value in excess of three million dollars ($3,000,000).”
To learn more about how Prop 15 hurts small businesses, click here.
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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.