SACRAMENTO – Senate Republican Leader Patricia Bates (R-Laguna Niguel) announced today that the Democrat-controlled Senate Governance and Finance Committee rejected her Senate Bill 1237. Her bill would have corrected an outdated interpretation of property “change of ownership” in Proposition 13 relating to taxation of business properties.
“Today’s defeat of my bill to strengthen Proposition 13’s tax protections is a disappointing case of politics prevailing over common sense,” said Senator Bates. “The committee missed an opportunity to help communities meet vital needs and protect taxpayers by correcting an outdated interpretation of Prop. 13. I will continue to do what I can to strengthen Prop. 13 and fight for better tax policy in California that ensures fair taxes for all property owners.”
SB 1237 revises the definition of “change of ownership” in the Revenue and Tax Code for purposes of determining the property tax base value of commercial property. The bill is designed to prevent a repeat similar to the 2006 purchase of a hotel in Santa Monica where the purchaser realized he could structure the transaction without any one entity owning a 50 percent majority share in the property as defined currently under “change of ownership.” Despite the fact that 100 percent of the original ownership of the hotel changed hands, the property was not reassessed, resulting in a tax loss to Los Angeles County of over a million dollars annually.
In response to today’s vote, key stakeholders made the following statements:
Jon Coupal, President of the Howard Jarvis Taxpayers Association
“We've always believed the Santa Monica hotel purchase depicted in this press release should be deemed a change of ownership within the letter and the spirit of Proposition 13. Killing this bill shows that progressive tax and spend interests don't want to fix how Proposition 13 is interpreted, but they'd rather maintain the status quo in order to advocate for a larger split roll tax increase on commercial property. Rather than fight for the better policy of fair property tax assessments, they would rather play politics with this important issue.”
Rob Lapsley, President of the California Business Roundtable (@CalRoundtable)
“As one of the highest-taxed states in the nation, Prop. 13 remains one of the most important protections for all Californians. We once again strongly support Senator Bates’ leadership on SB 1237 to provide a technical clean-up provision regarding taxation of business properties. If this bill had been passed when it was first introduced in 2016, more than $50 million in new property tax revenue would have been available to help school children, the poor and the elderly. Instead, SB 1237’s defeat in committee shows that special interests are more interested in pushing for an $11 billion split roll property tax increase on the November 2020 ballot instead of supporting real solutions today.”
Rex Hime, President and CEO of the California Business Properties Association
“The defeat of SB 1237 is another sad example of politics over policy – a roadblock to providing local government with resources to meet their many needs.”
Senator Bates and Jon Coupal recently wrote an op-ed on SB 1237 that was published by the Southern California News Group. Click here to read it.
SB 1237 is supported by the Howard Jarvis Taxpayers Association, California Business Properties Association, California Association of County Treasurer-Tax Collectors, and the San Francisco Chamber of Commerce.
Senator Bates authored a nearly identical bill in 2016 with SB 259, which won bipartisan support from the Senate Governance and Finance Committee, only to be killed quietly by the Democrat-controlled Senate Appropriations Committee. A similar bill authored by former Assembly Members Tom Ammiano (D-San Francisco) and Raul Bocanegra (D-Pacoima) earned bipartisan support in 2014 and cleared the Assembly, only to die in the Senate.