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Self-Storage Associations Help Defeat California Prop. 15 Targeting Commercial Property Tax

Update 11/18/20 – The results of the 2020 California election are largely confirmed, and Prop. 15 has been conquered. Rob Lapsley, co-chair of the “No on Prop 15” coalition, praised the state and national associations for their endeavor to stop the legislation that would have raised property taxes on commercial properties. “Prop. 15 was defeated as a direct result of the outstanding support of the self-storage industry,” he wrote in a note to SSA officials. “The Self Storage Association was one of the earliest leaders to oppose split roll. Your efforts reflect true leadership to protect all Californians from the largest tax increase in state history. We could not have been successful without your help.”

Though ballots are still being counted, about 650,000 Californians voted against the measure. With 95 percent of the votes counted, the proposition is losing by 4 percent. The Associated Press has declared it beaten, according to a Nov. 16 email newsletter from the SSA to its members.


9/29/20 – The California Self Storage Association (CSSA) and national Self Storage Association (SSA) have joined efforts to defeat California Proposition 15, which will appear on the Nov. 3 General Election ballot. If passed, the measure would change the way property tax is assessed for commercial businesses. Its aim is to raise $6.5 billion to $11.5 billion for local governments and schools. CSSA, SSA and other organizations argue the “Split Roll Initiative” would unnecessarily burden small businesses, including self-storage operators.

Prop 15 would override the commercial real estate tax assessments previously established by Proposition 13, enacted in 1978. Under that legislation, residential and commercial properties are reassessed for property tax only when sold. It limits the tax rate to 1 percent of the assessed value, with a maximum increase of 2 percent per year. The new measure would keep existing rules in place for residential properties, but commercial properties would be reexamined every two to three years. The change would go into effect in 2022 for large companies and 2025 for smaller companies, according to the “Los Angeles Times.”

Prop. 15 does include exemptions for commercial properties worth less than $3 million and businesses with fewer than 50 full-time employees; however, to qualify, a company must be independently owned and operated and hold real property in the state. Many small businesses rent the land they occupy via a “triple net lease,” leaving them vulnerable, according to the group “No on Prop 15.” Such a lease holder is responsible for paying property taxes, insurance and maintenance costs.

In December, the CSSA and SSA created a task force, comprised of members from both associations, to identify and combat legislation that could negatively impact self-storage operators in the state. Last week they issued a joint letter highlighting their concerns about Prop. 15 and outlining steps to fight it.

“California is in the midst of an unprecedented economic crisis, and yet another threat is on the horizon for consumers. Prop. 15, on the November ballot, will be the largest property-tax increase in state history at $11.5 billion per year,” association officials wrote. “Prop 15’s higher property taxes will cause the cost of living to increase for all Californians as businesses face higher operating costs. The result is consumers and businesses can expect to pay more for everything from their storage unit to their groceries. That is why small businesses, farmers, social-justice organizations and taxpayer advocates across California oppose this massive tax increase.”

CSSA held a town hall for members on Sept. 24 to discuss the proposition. Rally cries from both associations have helped bring in donations to the “No on Prop 15” coalition. “Numerous self-storage owners have contributed to the fund to oppose Prop. 15, with a total of $2 million in contributions so far,” SSA officials wrote in a Sept. 28 email newsletter to its members.

CSSA is a nonprofit trade association dedicated to supporting the self-storage industry in California. The group offers educational events, networking opportunities, legislative advocacy and more.

The SSA represents about 22,000 U.S. and international member-affiliated self-storage facilities, according to its website. It’s allied with several state and international self-storage associations and has about 6,000 members.

Sources:
SSA Magazine Weekly 11/16/20, ‘No on Prop15’ Co-Chair Praises SSA and Self Storage Industry
CSSA, Prop. 15 - Split Roll
Los Angeles Times, Nearly Half of Voters Polled Back Prop. 15, a Property Tax Overhaul Aimed at California Businesses
No on Prop 15, Website
SSA Magazine Weekly 9/28/20, California Operators: Property Tax Protections Are Under Attack

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