A California initiative seeking to raise $12.5 billion annually by removing commercial and industrial properties from state constitutional tax protections, now qualifies for the November general election. However, a campaign opposing the measure said there could be a detrimental effect on businesses as California's economy recovers from the pandemic, Law360 reported.
Craig Becker, a Silicon Valley Tax partner at Pillsbury, said that stores that rent could pick up the tab for the increased property taxes through higher lease payments, which could create an additional fiscal challenge for them after the pandemic ends.
"Retail will be hit by this because most retail rents are pass-through, so that the retail tenant bears the full brunt of the property tax,” he said.
“The measure could heighten the administrative burdens of the state's property tax system,” Becker added. “Not only would the workload for assessors increase, but property tax appeals could skyrocket as property owners seek to challenge their higher tax bills.”
"The existing Prop 13 world has provided a fair degree of certainty, consistency and general workability to a system that's difficult anyway," Becker concluded. “I think it would be incredibly challenging if this were to pass.”