Client Alert - Protect Prop. 13 – Beware of the Upland Loophole!

Client Alert

September 24, 2022

Protect Prop. 13

Beware of the Upland Loophole!

We are sharing some valuable information that has been provided to us by California Business Properties Association. At the moment, this appears to impact properties in Los Angeles but we fully expect other cities and counties to jump on the band wagon and take advantage of this loophole in order to increase taxes. Read and make sure to “Stay Aware” of what’s going on.

With your help, in 2020, we defeated Proposition 15, the largest property tax increase in California history. Now we face a new threat - a dozen local measures using the hole blown into Prop. 13 by the courts to raise your taxes with a simple majority vote (51%) instead of a two-thirds vote. CBPA working with BOMA California is sounding the alarm bell on all these measures and attempting to help coordinate efforts and get your company engaged to stop them.

In L.A., our industry faces the largest property tax increases in the city’s history with Initiative Ordinance ULA (Transfer Tax) and Measure SP (Parcel Tax) that will be on the November general election ballot. Combined these two taxes increase the burden on taxpayers by $1.1 Billion ANNUALLY!

Initiative Ordinance ULA is a 4% real estate transaction tax on sales of properties valued between $5 million and $10 million, and 5.5% on properties valued at more than $10 million -- estimated to raise over $900 million per year. Measure SP is a new 8.4 cents per square foot parcel tax – raising over $200 million annually for parks and other programming.

These taxes impact every property owner and renter in Los Angeles because they are charged on both residential and commercial properties.

We have attached a one-pager that provides a good overview of the issue.

The following link takes you to the campaign website for more information to share with your peers/tenants/friends and family: https://votenoulaandsp.org/

To win in L.A. – to stop a $1B increase in ANNUAL taxes - it will cost a one-time budget of $8M to run the campaign. That is a good risk management cost-benefit ratio! We face similar threats in Santa Monica, San Francisco, South San Francisco, and several other cities. Please contact CBPA if you want to discuss how to get engaged in stopping these measures that will use the Upland Loophole to increase real estate taxes with a simple majority vote. If you don’t have a measure impacting you this November yet, chances are you will soon. We must stop these now and we must pass the Taxpayer Protection Act in 2024 to close the Upland Loophole and protect Prop. 13 for good. The more organizations and companies like yours that step up and help, the less the burden is on each one.

Several local BOMA associations are active and engaged already but November is a major election, and we are calling for “all hands on deck,” and hope that your companies can also step up and engage. We are available to help put together briefings on issues facing our industry in November – just let us know. Thank you for supporting your industry through being engaged with your local BOMA and for going above and beyond by participating in BOMA California and engaging with us in Sacramento at CBPA.

Respectfully,

Matthew G. Hargrove

President & CEO

Reprinted with permission.

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Any information contained herein is intended for informational purposes only and should not be construed as legal advice. Seek competent counsel for advice on any legal matter.

RICHARD L. SEIDE, APC

901 Dove Street, Suite 120, Newport Beach, CA 92660- 3018

Tele: (949) 474-8000; FAX: (949) 474-8030

www.SeideLaw.com