Purported Study on Small Businesses in California Analyzes Proponents’ Lies, Not the Actual Initiative Language
SACRAMENTO, CA – Once again proving that they do not understand the initiative THEY wrote, proponents of Proposition 15, the largest property tax hike in California history, today released a report by Beacon Economics claiming to examine the impacts to small businesses, should the largest property tax increase in state history pass.
“This report directly contradicts itself, identifying in the ‘Context’ section that ‘the initiative excludes properties whose owners have $3 million or less in holdings in California.‘ However, in its analysis, the report wrongly says, ‘Prop 15 doesn’t apply to properties of less than $3 million in value.’ The latter is not true, but it is an often-repeated misrepresentation by proponents trying to hide the true impact this measure will have on small businesses throughout the state. This error in their analysis massively underrepresents the number of businesses affected by the measure,” said San Bernardino County Assessor Bob Dutton.
The distinction between properties worth less than $3 million in value and owners who own property less than $3 million is a critical distinction. The Black barbershop recently featured in a No on 15 ad is the perfect example of just how flawed this new Beacon study is. The property itself is valued at less than $100,000, far below the $3 million threshold. However, the owner owns multiple commercial properties in the City of Sacramento whose cumulative value is more than $3 million, meaning all properties owned by that owner, including the barbershop whose property is valued less than $100,000, will be reassessed under Prop 15. None of these types of properties are accounted for in this study. Read more on that analysis here.
“The Beacon Economics study cannot quantify the true impact of Prop 15 on small businesses because the data necessary to do so does not exist,” said Michael Bustamante, spokesperson for the No on Prop 15 campaign. “There is no statewide database to determine how many properties each whole or partial owner of each commercial property owns, something that will have to be created if Prop 15 passes. This is part of the implementation nightmare that has caused the California Assessors’ Association to oppose Prop 15. While there is no way to accurately determine how many properties will be affected by this requirement, significantly more properties with small business tenants will be assessed than are captured by this partial and flawed analysis.”
The true impact Prop 15 will have on countless small businesses and the rents they pay is being told by small business owners throughout the state.
“Most, if not all small businesses and restaurants like mine, have a triple net lease, meaning we are contractually obligated to pay for a percentage of the building’s property taxes, insurance and maintenance,” said Laurie Thomas, a San Francisco restauranteur. “When I signed a lease extension for my twenty-year-old restaurant four years ago, I knew what the property tax amount would be. If Prop 15 passes, the property tax portion of my annual lease costs could go from the $6,000 we pay now to well over $36,000 once the building is reassessed. I am very concerned that I, and many other small, neighborhood restaurants and businesses like mine, will not be able to keep our doors open and our workers employed if Prop 15 passes.”
Small businesses, which are already struggling to keep their doors open during the pandemic, will be left with few options if Prop 15 is not defeated – reduce employee hours, lay off employees, or pass on higher costs to consumers. Hear what small business owners across the state have to say about Prop 15 here.
Below is a recap of the provisions of Prop 15:
- Property worth less than $3 million may be reassessed if any direct or indirect owner of the property in question also has a direct or indirect ownership interest in other commercial or industrial property with an aggregate of $3 million.
- There is NO exemption for “small businesses” in the reassessment provision of Prop 15.
- Small businesses are given a very narrow definition in Prop 15 and must meet all three criteria below to receive the full personal property tax exemption or delay reassessment to 2025-26 if 50% or more of the occupied square footage is in use by a “small business”:
- Have fewer than 50 full-time employees
- Be independently owned and operated
- Own real property in California
Read how Prop 15 hurts small businesses for yourself here.
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.