HomeMy WebLinkAbout06 - Opposing California Proposition 15 — "Tax on Commercial and Industrial Properties for Education and Local Government Funding Initiative (2020)Q SEW Pp�T
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c�<,FORN'P City Council Staff Report
September 22, 2020
Agenda Item No. 6
TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL
FROM: Dan Matusiewicz, Finance Director - 949-644-3123,
dmatusiewicz@newportbeachca.gov
PREPARED BY: Steve Montano, Deputy Finance Director,
smontano@newportbeachca.gov
PHONE: 949-644-3240
TITLE: Resolution No. 2020-82: Opposing California Proposition 15 — "Tax
on Commercial and Industrial Properties for Education and Local
Government Funding Initiative (2020)"
ABSTRACT:
Proposition 15 would amend the California Constitution to require commercial and
industrial properties, except those zoned as commercial agriculture, to be taxed based
on their market value, rather than their purchase price. Proposition 15 would repeal long-
standing Proposition 13 protections for business properties and raise property taxes for
commercial and industrial properties. The City Council requested a resolution opposing
Proposition 15 and maintaining current Proposition 13 protections.
RECOMMENDATION:
a) Determine this action is exempt from the California Environmental Quality Act (CEQA)
pursuant to Sections 15060(c)(2) and 15060(c)(3) of the CEQA Guidelines because
this action will not result in a physical change to the environment, directly or indirectly;
and
b) Adopt Resolution No. 2020-82, A Resolution of the City Council of the City of Newport
Beach, California, Opposing California Proposition 15, Entitled, "Tax on Commercial
and Industrial Properties for Education and Local Government Funding Initiative
(2020). "
FUNDING REQUIREMENTS:
There is no funding requirement related to registering the City's opposition to the
proposition. If the proposition is successful, the City's property tax base would further
expand but the impact on property tax revenue is currently unknown.
6-1
Resolution No. 2020-82: Opposing California Proposition 15 — "Tax on Commercial and
Industrial Properties for Education and Local Government Funding Initiative (2020)"
September 22, 2020
Page 2
DISCUSSION:
Proposition 15 would amend the California Constitution to require commercial and
industrial properties, except those zoned as commercial agriculture, to be taxed based
on their market value, rather than their purchase price. Proposition 15 would repeal long-
standing Proposition 13 protections for business properties and raise property taxes for
commercial and industrial properties. For more than 40 years, Proposition 13 has
provided certainty to homeowners, farmers and businesses that they will be able to afford
their property tax bills in the future. Proposition 15 will negatively affect a broad spectrum
of business owners, renters, employers, consumers and would also undermine
longstanding taxpayer protections.
ENVIRONMENTAL REVIEW:
Staff recommends the City Council find this action is not subject to the California
Environmental Quality Act (CEQA) pursuant to Sections 15060(c)(2) (the activity will not
result in a direct or reasonably foreseeable indirect physical change in the environment)
and 15060(c)(3) (the activity is not a project as defined in Section 15378) of the CEQA
Guidelines, California Code of Regulations, Title 14, Chapter 3, because it has no
potential for resulting in physical change to the environment, directly or indirectly.
NOTICING -
The agenda item has been noticed according to the Brown Act (72 hours in advance of
the meeting at which the City Council considers the item).
ATTACHMENT:
Attachment A — Resolution No. 2020-82
6-2
Attachment A
Resolution Opposing California Proposition 15, Entitled,
"Tax on Commercial and Industrial Properties for Education and
Local Government Funding Initiative (2020)"
6-3
RESOLUTION NO. 2020-82
A RESOLUTION OF THE CITY COUNCIL OF THE CITY
OF NEWPORT BEACH, CALIFORNIA, OPPOSING
CALIFORNIA PROPOSITION 15, ENTITLED, "TAX ON
COMMERCIAL AND INDUSTRIAL PROPERTIES FOR
EDUCATION AND LOCAL GOVERNMENT FUNDING
INITIATIVE (2020)"
WHEREAS, Proposition 15 would amend the California Constitution to require
commercial and industrial properties, except those zoned as commercial agriculture, to
be taxed based on their market value, rather than their purchase price;
WHEREAS, on June 6, 1978, Proposition 13, officially titled the "People's Initiative
to Limit Property Taxation" was overwhelmingly approved by California's voters, reducing
property tax rates on homes, businesses and farms, and capping the rate of tax increases
in the future,
WHEREAS, on the same ballot, voters rejected Proposition 8, which proposed a
"split -roll" property tax that for the first time in California history would have allowed the
government to discriminate against property owners based on the type of property owned;
WHEREAS, Proposition 15 would repeal long-standing Proposition 13 protections
for business properties and raise property taxes for commercial and industrial properties;
WHEREAS, for more than 40 years, Proposition 13 has provided certainty to
homeowners, farmers and businesses that they will be able to afford their property tax
bills in the future;
WHEREAS, Proposition 15 would eliminate the certainty of property taxes for
businesses and farmers by repealing current Proposition 13 protections for commercial
and industrial property and requiring reassessment at current market value at least every
three years;
WHEREAS, Proposition 15's higher property taxes could translate to soaring rents
for the majority of small businesses who do not own the property on which they operate;
WHEREAS, Proposition 15 could negatively affect renters, who would see their
rents increase as landlords experience higher operating costs and pass these costs on
to their tenants;
Resolution No. 2020 -
Page 2 of 3
WHEREAS, Proposition 15's property tax increases would harm the ability of
employers to hire or retain California employees and lead to more businesses and jobs
leaving the state;
WHEREAS, Proponents of Proposition 15 seek to undermine and remove
taxpayer protections provided by Proposition 13 by requiring businesses to pay higher
property taxes than all other property owners;
WHEREAS, the "split -roll" initiative would increase the cost of food by increasing
property taxes on agricultural buildings and some crops;
WHEREAS, the County Assessors' Association found that the "split -roll" initiative
would result in a net loss of revenue for some counties due to the cost of newly created
exemptions for select property owners; and
WHEREAS, assessors repeatedly have stated that the "split -roll" initiative would
be impossible to implement given the unavailability of data and employees needed to
administer the proposed exemptions, and the limited timeframe set by the initiative.
NOW, THEREFORE, the City Council of the City of Newport Beach resolves as
follows:
Section 1: The City Council does hereby oppose Proposition 15 and supports
maintaining current Proposition 13 protections.
Section 2: The recitals provided in this resolution are true and correct and are
incorporated into the operative part of this resolution.
Section 3: If any section, subsection, sentence, clause or phrase of this
resolution is, for any reason, held to be invalid or unconstitutional, such decision shall not
affect the validity or constitutionality of the remaining portions of this resolution. The City
Council hereby declares that it would have passed this resolution, and each section,
subsection, sentence, clause or phrase hereof, irrespective of the fact that any one or
more sections, subsections, sentences, clauses or phrases be declared invalid or
unconstitutional.
6-5
Resolution No. 2020 -
Page 3 of 3
Section 4: The City Council finds the adoption of this resolution is not subject to
the California Environmental Quality Act ("CEQA") pursuant to Sections 15060(c)(2) (the
activity will not result in a direct or reasonably foreseeable indirect physical change in the
environment) and 15060(c)(3) (the activity is not a project as defined in Section 15378)
of the CEQA Guidelines, California Code of Regulations, Title 14, Division 6, Chapter 3,
because it has no potential for resulting in physical change to the environment, directly or
indirectly.
Section 5: This resolution shall take effect immediately upon its adoption by the
City Council, and the City Clerk shall certify the vote adopting the resolution.
ADOPTED this 22nd day of September, 2020.
Will O'Neill
Mayor
Leilani I. Brown
City Clerk
APPROVED AS TO FORM:
CITY ATTORNEY'S OFFICE
4"- L ce__—
ar n C. Harp
City Attorney