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Next week, voters will decide the fate of two critical ballot measures that would have profound impacts on existing commercial properties and the possibilities of seeing new residential development within our downtowns. The Board of the California Downtown Association has carefully considered both initiatives and has taken an “oppose” position on both Proposition 15 & 21 and urge members of CDA to cast a “no” vote when casting their ballots.

The ballot measure would make significant changes to the current Proposition 13 (enacted by voters in 1978) by allowing local governments to assess commercial property taxes based on that property’s current market value versus capping the tax assessment based on when that property was sold.

Although Proposition 15 wouldn’t apply to residential property owners, the initiative would impose a $13 billion tax increase on commercial property owners who own properties valued at over $3 million. If approved by voters, the initiative would unfairly punish property owners who have owned their properties the longest – as long-standing owners who would see the biggest spikes in tax assessments compared to property owners who recently purchased their properties. Nonetheless, beginning in 2022, the initiative would call on county tax assessors to reassess the value of properties at the current market rate and adjust the tax bills accordingly.

Small businesses would be severely impacted because under most commercial leases, tenants often pay the property taxes through a “triple net lease” structure. Therefore, in many cases, the tax increase would be passed along to the tenant’s existing lease. COVID-19 has had a devastating impact on the economic condition of our downtowns. Proposition 15 would impose a severe tax increase to our commercial properties and small businesses at a time in which we can least afford it.

The proposition would repeal portions of the state’s existing rental housing laws and open the door for extreme forms of “rent control” that would likely be enacted at the local level. Prop. 21 would allow for the establishment of permanent price caps on all forms of housing including single family homes and condominiums.

Furthermore, Prop. 21 undermines a new statewide rent control law just months after the law went into effect. That law was recently approved and signed by the Governor and represents some of the strongest renter protections in the country.

Passage of Prop. 21 would depress or reduce the value of residential property values and would result in fewer housing options being made available to tenants exacerbating the current housing shortage. Prop. 21 is nearly identical to Prop. 10 (2018) which was rejected by voters 60% no, 40% yes. CDA opposed Prop. 10 in 2018.

Andrew Thomas, CDA President

Executive Director

Westwood Village Improvement Association

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