[quote=evolusd]I’ve financed a ton of commercial properties around California over the years and will tell you that if an owner’s annual property tax expense increases materially, they’re going to find any way they can to share that cost with someone else, most logical person being the tenant. NNN leases are very common in commercial property and it will be on the tenant, who is responsible for paying the property tax, to negotiate with the landlord to change the lease. Obviously this will be subject to supply & demand forces. Retail & office where demand is currently soft the tenants are in a better negotiating position, but for apartments and industrial properties where demand is high and vacancy rates are low, you better believe tenant rent or NNN costs are going up.[/quote]
sadly have a really bad feeling prop 15 will pass and that this decision will put this states economy in a tailspin
I base this opinion given main street voter resentment sentiment ALONG w/ the inability of most to think two or three steps ahead of various knock on effects
sectors that IMHO will most likely be hit hard again (as if covid was not bad enough) by the “split roll” will be misc food services (small corner markets and various restaurants), small businesses w/ NNN leases (in strip malls and industrial parks), small farms, etc.
I’ve read,…
[quote]
San Diego is home to over 7000 restaurants, 500 hotels and there are roughly 186,000 employed in the industry. The average cost of living for a Single Parent with One Child is $55,000. The average Industry pay for a full time employee is $28,849.
AND FWIW in a TV news segment that reports on a restaurant business, the SD county tax assessor mentions half of the commercial/industrial properties in SD will be affected by higher property taxes because of “split roll” (which in turn will have effects on employment rates)
where the “study” itself (by beacon economics) highlighted the point(s),…
[quote] A random sample of about 22,000 commercial property transactions in California’s major population centers from 2018 to 2020 found that two-thirds sold for less than $3 million. The median price was $1.6 million.
OPPONENTS ARGUE THAT THE LEGISLATION WOULD:
• Be the largest property tax increase in the state’s history: The legislation would lead to a substantial tax increase ($12.5 billion per annum) on commercial and industrial entities. This would hurt small businesses, the agricultural industry, residential homeowners, and consumers.
• Raise the cost of living: The tax increases would cause businesses to increase the cost of groceries, health-care, energy, and other products and services. Some residents would be priced out of their communities, and the legislation would have detrimental impacts on low-income communities.
• Destroy jobs and small businesses: The legislation does not prevent increased taxes from being passed on to small businesses.
• Increase taxes on farms: The legislation would increase property taxes on the farming sector (barns, dairies, food processing plants, and cultivation sites), which would raise food prices.
• Enable the legislature to increase homeowners’ property taxes: Business owners who operate from their homes would pay higher taxes.
The merits of these claims notwithstanding, both sides agree that Prop. 15 would increase property tax revenue.
I’m not an economist but IMHO a better series of questions to ask would be, how many commercial/industrial properties are there in CA AND after that number is determined how many of the properties will be subject to split/roll “market” property tax (seems only after this basis info is known, can a cost/benefit analysis be done)
FWIW the reason I think this is the better approach to look at cost/benefit analysis of prop 15 is because this method accounts for long term successful businesses w/ high paying and skilled jobs (like Robinson helicopter up in Torrance)
w/ a “split roll” another home grown company TESLA that builds products that will be in much greater demand in the future, is going also going to face additional financial head winds producing products in state
[sarcasm on]
brilliant
[sarcasm off]
bottom line the beacon economics study to support prop 15 is worthless because it does not take into account successful profitable businesses that don’t sell (in the short two year sample size of RE sales of commercial/industrial properties pointed out in the beacon economic “study”)
