Los Angeles

A new measure to split-roll Prop 13 is set to appear on the November 2020 ballot. If passed, the measure would remove some of the tax protections and limitations for commercial and industrial property owners. The intention behind the measure is to increase tax funds for in-need services.

"The movement is driven by the notion that Prop 13 reform will result in a more equitable tax structure for businesses and raise revenue for education and state services," Michael Diaz, managing director and western regional leader of property tax services at Newmark Knight Frank, tells GlobeSt.com. "Teacher and various labor unions are supporters of the proposed reform."

Of course, this would have significant implications for property owners. Because commercial properties don't trade hands for several decades in some cases, the new measure provides for tax reassessment every three years, resulting in billion more in property tax. "In 2018, the University of Southern California estimated that if commercial properties were taxed at their market value, the result would equate to roughly $11.4 billion in additional revenue per year," says Diaz. "The report found that almost 80% of the $11.4 billion in lost revenue comes from only 8% of properties, which are valued at more than $5 million each, while half of all commercial properties are already assessed at fair or near fair market value."