Earlier this legislative session a historic agreement was reached in the Assembly Revenue and Taxation Committee between the major figures in the business community and the main group that has been seeking to re-work the “Change of Ownership,” rules under Proposition 13. For six years the author of Assembly Bill 2372 (Ammiano; D-San Francisco) had sought to blast Proposition 13 even on one occasion calling for an atom bomb approach.

We met with the author and the leadership of the Assembly Revenue and Taxation Committee and outlined what we believed would be appropriate steps to preclude future “abuses” of ownership changes.

Over the years, some complicated property purchase deals have given the appearance of an attempt to skirt Prop. 13’s change of ownership rules, whether they were doing that or not.  These “examples” have then become cause celebre and are being used as the main weapon to galvanize anti-Prop. 13 groups to undermine the law as a whole.  This agreement was meant to update some of the laws implementing statutes to address that appearance of “gaming” the system.

Currently, a property is reassessed when it is sold and/or changes ownership. However, if none of the purchasers acquires more than a 50% interest reassessment may not necessarily be triggered.   AB 2372 was amended to clarify that as long as 90% of a property is sold, a reassessment would be triggered, regardless of whether any individual buys more than 50% of the property.  Safeguards were negotiated  to clarify that the change of ownership clarification does not apply to normal turnover of stock for publicly traded companies.

As an organization, we have always staunchly defended Proposition 13 and will continue to do so.  However, part of an effective defense of the law recognizes that some of the original implementation language may need to be updated to assure the goals of Prop. 13 are being met.  We believe this is one of those cases.

However, this historic opportunity has been blocked by the very same groups that have called for reform of Proposition 13. Why one would ask? It is because the public employee groups that want to create split roll property tax in California to help fund their pension funds and other payoffs recognized that this wasn’t a big enough “payday” for them.

Thus the effort on the part of CBPA and the California Chamber to fix the “problem” has been blocked in the waning hours of the legislative process. Another example of public employee union greed and lack of concern for the big picture economic fix for California – so commercial real estate remains the top target of those who want to tax more.

Look for this issue to resurface in 2015 as both sides prepare for a potential election battle in November of 2016.

Lots more is happening in the last hours of the legislative session but deadlines require us to recount all of that in the next column.

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