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Prop. 15 Defeat Linked To Greater Property Tax Increase Fears, Opponents Say

Proposition 15, which would have increased property taxes on commercial and industrial properties in California by taxing them based on current market values instead of their purchase prices, failed to pass in the Nov. 3 election. 

The proposition would have repealed part of a 1978 law, Proposition 13, that limits property taxes and caps annual increases. But its appearance on the ballot shook property owners and the business community, many of whom saw the move as step one of a plan to fully repeal Prop. 13. Opponents of the measure say voter fears of a full repeal may have helped the campaign against it. 


“It’s time for the proponents to accept that Californians now know the importance of preserving Prop. 13 protections, and the voters don’t want higher property taxes,” California Taxpayers Association President Rob Gutierrez said at a press event organized last week by the No on 15 campaign. Gutierrez said there have been at least three on-ballot attempts to overturn Prop. 13 since it passed, and with this latest vote, they have all failed.

As of Monday afternoon, 52% of voters had cast ballots against Prop. 15, with 95% of precincts reporting. The opposition had a lead of over 650,000 votes. 

Allan Zaremberg, president and CEO of the California Chamber of Commerce, said the clincher was the ads the campaign put out. Zaremberg said the proposition’s title and summary in the voter information pamphlets put out by the state didn't make clear that this measure would result in increased taxes. 

“We had to tell people this was about tax increases,” Zaremberg said. “We know from our research that people who saw our ads were even more strongly opposed than people who didn’t know it was about a tax increase.” 

The Official Voter Information Guide notes that the proposition would increase funding sources for schools and outlined which property owners would be exempt but also mentions property taxes would be increased on commercial holdings worth more than $3M, and that doing so would generate those added school funding sources.

Several speakers at the event emphasized that their opposition to the measure was not a vote against schools or education, which were slated to benefit from part of the revenue generated by the reset taxes, but a vote against higher taxes.  

One of the biggest contributors to the campaign in support of the measure was the California Teachers Association Issues PAC, which donated $19.8M. 

In a tweet after the election results were announced, the California Teachers Association thanked the coalition of supporters “that came together to put students and families ahead of additional profits for a handful of big corporations,” and declared that “the fight for much-needed funding for our schools and communities continues!”

The Chan Zuckerberg Initiative LLC, a charity established and owned by Facebook founder Mark Zuckerberg and his wife, Priscilla Chan, was another major donor, giving $14.4M to support the proposition. 

“The coalition for Proposition 15 has been — and remains — committed to tackling some of California's most pressing local challenges, particularly in communities that have been systematically under-resourced for decades,” Michael Troncoso, vice president and head of justice and opportunity for the Chan Zuckerberg Initiative, said in a statement to Bisnow.

CZI had been a supporter of Prop. 15 since 2018, before it was officially a proposition. In a news release announcing a $4.5M contribution to support the campaign over the summer, Troncoso said CZI felt the measure would provide much-needed funds for communities to meet their most urgent needs, especially during the coronavirus pandemic, “a time when other funding sources like the state budget are facing historic shortfalls.”

Opponents of Prop. 15 spent $74.5M to defeat the measure, $39.2M of it from the California Business Roundtable Issues PAC. The PAC’s main donors this election season included big names in real estate — Blackstone Group, Kilroy Realty and Hudson Pacific each gave over $5M, CityWatch LA reported

Though the measure failed, real estate developers and academics have said that some damage has already been done in terms of discouraging developers and investors from bringing their money and business to California. 

Jamison Realty CEO Jaime Lee, speaking at a Nov. 11 USC event on the state of the multifamily market, said some investors she has spoken to who aren't already investing in California mentioned Prop. 15 and similar proposals as one of the barriers to doing investment deals in the state. 

“Prop. 15 was significant, and although it wasn’t aimed at multifamily, the specter of it and that it could eventually come toward residential did shake some people,” Lee said.

Related Topics: property taxes, Proposition 13