Updated: Sep 30, 2020
"The burden of Prop. 15 would fall on the state’s largest corporations and highest-value properties.”
“Most claims about Proposition 15’s impacts on small businesses are unfounded ... Prop. 15 will not impact small business renters, including triple net lease tenants”
According to a new Beacon Economics report commissioned by the Silicon Valley Community Foundation, Prop. 15 “will not impact small business renters, including triple net lease tenants” and “most claims about Proposition 15’s impacts on small businesses are unfounded.” What's more, it reinforces the fact that "the burden of Prop. 15 would fall on the state's largest corporations and highest-value properties."
This study, the first to be done specifically on Prop. 15 and small businesses, also serves to invalidate the primary arguments made by corporate-backed opponents of Prop. 15 who have been hiding behind small businesses throughout this campaign. This comes after a court ruling and multiple fact checks having already struck down arguments from opponents.
Here is what the report’s authors had to say:
“Most claims about Proposition 15’s impacts on small businesses are unfounded. Our analysis shows that this initiative will not strain small business owners with skyrocketing rents and should actually affect small businesses very little,” said Christopher Thornberg, founding partner of Beacon Economics.
“Commercial rents are based on many market factors but property tax is not one of them. If it were, reassessments would trigger rent increases and there is no evidence of this,” said Taner Osman, research manager at Beacon Economics.
Here are some of the main findings from the report:
“Commercial rents are driven by location, local market conditions, the nature of a local economy (high-wage areas are associated with higher rents), and building age and size.”
“For average commercial properties, reassessments do not increase rents. Office buildings have a small relationship between reassessments and rents. Reassessing a 20-year-old office building to current market value could lead to a one-time rent increase of roughly 2%.”
“Properties owned by most small businesses are low-value and therefore shielded by the Prop. 15 exemptions.”
“This finding is consistent with studies that show that the burden of Prop. 15 would fall on the state’s largest corporations and highest-value properties.”
“This study reinforces the fact that, under Prop. 15, a fraction of top corporations will finally pay their fair share while small businesses would be protected,” said Alex Stack, Yes on 15 spokesperson. “We know the corporate-backed opponents will say whatever it takes to keep their tax loopholes, but the data and research consistently sets the record straight.”
Prop. 15 is a November ballot measure that will close corporate property tax loopholes to reclaim nearly $12 billion every year for schools and critical local services – all while protecting homeowners and renters, small businesses, and agriculture. Prop. 15 will also cut business personal property taxes for small businesses. An analysis of Prop. 15 showed that only the top 10% of commercial and industrial properties will generate 92% of the revenue.