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Providing quality legal services to statewide and national clients in ADA defense, Personal Injury, business and real estate for more than 35 years

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Proposed ballot initiative would revise California Proposition 13

In 1978, California voters passed a ballot measure that caps property taxes at 1 percent of the property’s original purchase price and limits increases to 2 percent per year. Proposition 13 applies to both residential and commercial properties, but a new ballot initiative would change the state’s constitution to tax industrial properties, commercial real estate and land that will not be used for residential development based on their current market values.

Supporters of the initiative say that it would add between $6 and $10 billion each year to state coffers that could be used to improve schools, community colleges and cash-starved programs. Under the proposed measure, businesses with property holdings worth less than $2 million would still pay taxes under the rules established in 1978. When calculating the financial benefits of passing the ballot initiative, its backers accounted for increased property assessment costs and the impact that the measure would have on income tax revenues.

Groups in favor of the proposal include PICO California and the League of Women voters, and they expect an official summary and title to be issued by the end of February. However, these groups must then work hard to gather the signatures necessary to get the measure on the November ballot and raise the money that will be needed to win what is expected to be a contentious campaign.

Attorneys who deal with commercial real estate legal issues will likely follow political developments that could affect their clients closely. Property taxes are an important consideration for commercial property investors, and attorneys could keep them informed of pending legislation or ballot initiatives that could influence their decisions.

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