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Commercial Landlords Criticize Los Angeles Tax Proposal Aimed at Raising Money for Schools


Office Property Owners Could Pay Up to Hundreds of Thousands a Year If Voters Pass Parcel Tax on June 4

Los Angeles voters are scheduled to cast ballots in a special election June 4 to decide the fate of a proposed property tax that would raise $500 million a year for public schools, a measure criticized by businesses, anti-tax advocates, commercial property owners and apartment landlords who would pay the most under the change.


Measure EE would raise about $750 per student a year over 12 years by instituting a new 16 cents-per-square-foot parcel tax on residential and commercial property within the boundaries of Los Angeles Unified School District, California’s largest public school system and the second-largest in the United States behind New York City. It needs support of two-thirds of voters to pass.


The district drafted the measure after teachers unions led a six-day strike against the district in January calling for limits on class sizes and number of new charter schools, as well as the hiring of more school nurses and librarians among other issues.

Supporters of the measure say owners of larger homes and businesses would pay more than owners of smaller properties. For example, an owner of a 2,000-square-foot home would pay $320 per year, about $26 per month, while owners of large commercial properties like the 1.43 million-square foot U.S. Bank Tower in downtown Los Angeles, owned by Overseas Union Enterprise Ltd., of Singapore, would pay about $229,206 a year.


The measure is endorsed by a range of labor, community and civic leaders, including United Teachers Los Angeles, SEIU Local 99, Los Angeles Mayor Eric Garcetti and the City Council.


Opponents of Measure EE include the California Business Roundtable, which said 100 parcel tax measures appeared on state ballots last year alone, primarily as a way to go around Proposition 13, the state’s historic property tax-freezing ballot measure passed in 1978. Measure EE is the second property tax increase proposal in just two years for Los Angeles Unified School District residents already burdened with some of the highest housing costs in California, the business group said.


“Since Proposition 13 continues to be supported by a large majority of Californians, special interests increasingly use parcel taxes like Measure EE to raise property tax revenue from residents and businesses,” Roundtable President Rob Lapsley said in a statement.


The Business Roundtable said it “strongly supports” an alternative way to fund schools, citing California Gov. Gavin Newsom’s budget proposal to increase baseline school funding and dedicate $3 billion to a one-time state budget allocation to pay down local districts’ pension obligations to help free up more money for local districts to spend at their discretion.


Even if passed, Measure EE may be on shaky legal ground. The Howard Jarvis Taxpayers Association, which opposes tax increases, filed a lawsuit to block the measure. The group alleged that district Superintendent Austin Beutner ordered a significant change to the ballot language after the school board had already voted to send the measure to the ballot, according to a copy of the lawsuit.


The Roundtable said voters are being asked to pay more without any assurance their money will be spent in the classroom and on students. The group labeled the measure “simply another step by special interests to entirely undo Prop. 13 next year with a split-roll property tax increase initiative,” a measure which would effectively repeal the tax-limiting law for commercial property owners.


The business group alleged the new teachers contract after the strike called for Garcetti to endorse the split-roll initiative, opposed by commercial landlords and other business interests.


“We will continue fighting to keep property tax rates predictable by protecting Prop. 13 and the certainty it provides California residents and businesses already struggling to make ends meet in our ongoing affordability crisis,” Lapsley said.

© 2020 by Lee & Associates Investment Services Group

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