Tell Your Tenants: Proposition 15 will Raise their Rent
Amid an unprecedented economic crisis, special interests are pushing Proposition 15 on the November 2020 statewide ballot which would undo Proposition 13’s property tax protections. This will be the largest property tax increase in California history.
However, Prop. 15 also has a profound impact on our tenants throughout California.
Specifically, the $11.5 billion annual tax increase doesn't come from nowhere - instead, it simply gets siphoned from small business owners, commercial tenants, and everyday consumers.
Proposition 15 will increase property taxes and raise rent/costs for business tenants
Most small businesses do not own the property on which they operate.
Instead, they rent and have what is called a “triple net lease,” where property owners pass along property taxes, insurance, and maintenance costs directly to the tenants.
So, an increase in property taxes will simply be paid for by commercial tenants through an increase in rent.
Certainly, within expensive corridors in San Francisco and Downtown Los Angeles, rent will increase exponentially for many businesses, large and small.
Numerous studies also indicate that raising property taxes on small businesses will disproportionately hurt female and minority-owned businesses the most. These most vulnerable community businesses will either be forced to downsize or close entirely.
Furthermore, Prop. 15 includes ZERO protections for small businesses who rent their property.
To learn more about why Prop. 15 won't protect small business owners, click HERE.
Ultimately, for most businesses to stay afloat, Prop. 15 will force businesses to pass costs onto consumers. Everything people need will increase in cost, including groceries, fuel, utilities, daycare, and health care.
This will only make it harder for businesses to stay afloat as consumers will avoid spending more than they have to.