Business Property Not Under-taxed

NOV. 12, 2010

By WAYNE LUSVARDI

A rebuttal is required to Lenny Goldberg of the California Tax Reform Association who contends that small business properties are overtaxed and large corporate and franchise business properties are under taxed by Prop. 13 in California (“Is Prop 13 Hurting Small Business,” Nov. 11).

The mischievous Lenny Goldberg wants you to believe that it is unfair that a small “mom and pop” gas station owner has to pay roughly $30,000 per year in property taxes and a big oil company gas station down the street only pays half of that.  And he also wants you to believe that it is also unfair that a Trader Joe’s Market pays only about $7,500 in property taxes while a Draeger’s Market pays roughly $66,500 in taxes.  Since Goldberg doesn’t cite what actual properties he is referring to we don’t know if he concocted these numbers or not. For the moment, let’s assume the taxes reported by Goldberg are actual.

First, the comparisons Goldberg makes are apples and oranges. As they say in real estate appraisal, all comparables are sales but not all sales are comparables.

Goldberg doesn’t disclose whether the overtaxed “mom and pop” gas station has a retail food store component to the gas station or revenue from a billboard and the big corporate gas station does not.

Neither do we know whether the under-taxed big corporate gas station is encumbered with a ground lease whereby the land owner pays a property tax only on the land rent and the business operator is taxed on the building, gas tanks, pumps and improvements as well as state sales tax, corporate income tax, business tax, utility user’s tax, etc.  What may appear to be a tax inequality may not be when the legal arrangements are better understood. So the alleged $15,000 discrepancy in favor of the big corporate gas station property may not be unequal at all.

Goldberg just finds a tax inequality that works for what he wants to prove and reports it. This works for political advocacy but not for real estate appraisal or for meeting disclosure requirements in a real estate transaction. Neither should it work for sound tax policy.

The Draeger’s market in Danville, Calif., for example, was built in 2006, is 43,000 square feet (an acre) in building size alone and is located in a shopping center with mirror pools and ample parking.  Draeger’s targets upscale shoppers looking for catering, a delicatessen, and high priced custom food– see photo here.

The typical Trader Joe’s store is 10,000 to 15,000 square feet in size, is a stand-alone building, has no specialty service departments, is intentionally located on under-parked leased properties to keep prices low and caters to shoppers looking for modest prices. See photo of a newer Trader Joe’s Store here.

But let’s forget a moment that Goldberg is subtly trying to compare apples and oranges in his examples.   What Goldberg is really trying to do is demonize large commercial property owners in the minds of small business operators as well as in the eyes of a possibly gullible public in order to overthrow the provisions of Proposition 13, which protect against unfair property tax reassessments. Fortunately, he doesn’t do a very good job and most people are probably able to see right through his deviousness.  But for those true believers who are easily convinced that commercial property owners are making out like bandits under Prop. 13 while the state and public schools are going broke and the unemployment insurance fund is running in the red, here is some other information to consider.

Mr. Goldberg failed to tell you that California has the highest gasoline taxes per gallon in the U.S.

The Tax Foundation ranks California 49th worst in total taxation out of 50 states.  As shown on the table below, California offsets its relatively lower property taxes with higher gas taxes per gallon compared to other high-tax states. California’s high gasoline taxes don’t show up, however, in gas station property sales prices.  Gasoline taxes come out of all drivers’ pocketbooks not only those of property owners of gas stations.

HIGHEST TAXED STATES IN U.S. (50th = highest taxed)

State Rank Sales Tax Rate Property

Tax % of Income

State Corp. Income Tax Rate Capital Gains Tax Real Estate Gas Tax Per Gal. Utility Users Tax Rate School Parcel Tax (flat tax)
New York 50 4.00% 4.47% 7.1% 6.85& $0.45 None None
Calif. 49 8.25% 3.34% 8.84% 9.30% $0.46 5% to 10% $50 to $250

Year

New Jersey 48 7.00% 6.00% 9.36% 6.47% $0.14 None None
Conn. 47 6.00% 5.07% 7.5% 4.50% $41.6 None None
Ohio 46 5.50% 3.70% 2.0 to 3.4% 8.98% $0.28 None None
Iowa 45 6.00% 3.63% 6 to 12% 6.98% $0.22 None None

Source: The Tax Foundation, 2010

Of the six highest taxed states in the U.S. shown above, California also has the highest sales tax rate, the second highest corporate income tax rate, and is the only state whose cities charge a utility users tax (from 5 percent to 10 percent) on water and power bills which is siphoned off into city General Funds to pay for salaries and pensions.  California also has the highest capital gains tax on real estate of all 50 states.

California is also the only state whose school districts charge a “parcel tax” on top of regular property taxes to pay for school buildings or teacher salaries.  Parcel taxes typically range from $50 to $250 per “parcel” (i.e. lot) per year. In Berkeley, Measure H Parcel Tax imposes a $9.46 per square foot parcel tax for schools on commercial properties, compared to $6.31 for residential properties. This higher tax on commercial properties runs opposite to what Goldberg wants you to believe.

Many California cities also tack on a business tax and a real property transfer tax when the property is sold (from about 0.25 percent to 0.50 percent, which would equate to $6,000 to $12,000 on the gas station property or $11,000 to $22,000 on the Draeger’s Market properties cited above).

Then there is the new 3.8 percent transfer tax on sales of all properties under Obamacare. On a prime Class A gas station site that would be about $50,000 or more just on the land alone not counting the building, pumps, and storage tanks.  The Obamacare surcharge tax on the Draeger’s Market property would be about $168,500.

California Tax Rank (1st best; 50th worst)

Property Tax Sales Tax Corporate Income Tax Capital Gains Tax on Real Estate Gasoline Tax Utility User’s Tax School Parcel Tax Overall Rank by author
18th 49th 33rd 50th 50th 50th California

Only

50th

California

Only

50th

Source: Tax Foundation and author

California ranks as the worst or next to the worst of all 50 states in five of the seven taxes shown above, despite modest property and corporate taxes.  If we are to believe Goldberg, California should rank last in commercial property taxes too.

There are those for which there is no amount of information that will persuade them that owners, especially of large corporate-owned commercial properties, in California are not under-taxed.  Social psychologists show that if there is a conflict between what you believe (“big corporate real estate is under-taxed”) and verifiable reality (California has highest overall tax rates), people will reconcile the conflict by their beliefs growing stronger and/or strongly denying the reality at hand as well as demonizing one’s opponent.

But for those who are not true believers in an anti-business ideology, the modest property taxes which benefit commercial properties in California under Prop. 13 are more than offset by California’s worst overall tax ranking of all states.  To talk about tax fairness we have to talk about the cumulative tax burden in California not property taxes under Prop. 13 alone.

Wayne Lusvardi is a real estate appraiser in Pasadena, California.  He submitted testimony to the California Commission on the 21st Century regarding a proposed split commercial/residential property tax roll to amend Proposition 13 – Read here.

19 comments

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  1. Wayne Lusvardi
    Wayne Lusvardi 12 November, 2010, 13:59

    Correction: The table above “HIGHEST TAXED STATES IN THE U.S.” has an error. The gasoline tax for the State of Connecticut should be $0.41 NOT $41.6.

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  2. Wayne Lusvardi
    Wayne Lusvardi 12 November, 2010, 15:36

    Here are the proper links to photos of the Draeger’s Market and typical Trader Joe’s Market stores for visual comparison:

    Link to photo of Draeger’s Market, Danville, CA
    http://www.stylecabana.com/merchants/blackhawk-plaza-danville-ca/mall

    Link to photo of typical newer Trader Joe’s Market, Pasadena, CA
    http://local.yahoo.com/info-20619532-trader-joe-s-pasadena

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  3. Jennifer
    Jennifer 12 November, 2010, 15:49

    What a scurrilous attack on (the mischievous?!) Lenny Goldberg. Fortunately, since this is the 21st century, there are Google maps and APNs that anyone can look up. And, since this is in Menlo Park, I’ll dig them all up for you! I’ll even run to the City right now (which is open this Friday — a miracle, since budget cuts close it every other week) and see if I can get sales tax data for the different venues.

    And, one small note — the gas station data includes unsecured property tax to include the value of buildings, furniture and fixtures.

    But, to summarize in advance, Wayne — it is you “true tax believers” who hurriedly force feed commercial sales and income taxes into the argument in hopes of obscuring the enormous property tax benefits gleaned by a small percentage of commercial landlords.

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  4. Jennifer
    Jennifer 13 November, 2010, 06:39

    Wayne, as much as you understandably want to believe that the California property tax system still has an element of fairness, the Menlo Park examples are real. Indeed, they were first published in the local paper, The Almanac News, last March.

    http://www.almanacnews.com/news/show_story.php?id=6271

    Note that, in the hundred-plus postings that followed the article, not one person challenged the validity of the comparisons. (Nor when the article was republished seven days later in the neighboring Palo Alto Weekly. Nor in the comments attached to the open letter to Warren Buffet that sparked the article.)

    Why not?

    Because, if you live around here, you already know a lot about all five gas stations and the grocery stores.

    But let’s try to do this remotely! Come visit Menlo Park on Google maps. Shall we start with the station that’s paying the most – the Coast at 275 El Camino Real (zip 94025)? Plug in the address, then zoom down. You’ll see that the article did get one thing wrong – it is not on a major intersection – indeed, there’s no traffic light at all because it’s not on a major cross street either – just a little three-block road through a residential neighborhood. Now hop to the San Mateo County Tax Collector’s site and plug in the same address (or APN 071413170) to see their $27K+ general property tax bill (+$3K in other assessments). There’s another $140K of assets on the unsecured property rolls. OK, head down to street level and take a look. No billboard. No service bays. A small 20×30’ food store including the cashier and restrooms.

    Now pull yourself two short blocks north to 495 El Camino and check out the Shell station. This is on a major three-way intersection with the large new Safeway across the street. You’ll need to input three APNs, because this single property consists of multiple parcels – 071411170, 071411180, and 071411450. And don’t miss the $454,328 of assets on the unsecured property rolls. Total $14K tax (+$4K in other assessments). Note the three service bays and snack store. (No billboards – we don’t do billboards in Menlo Park.)

    Now head down to 1200 El Camino (APN 061430470), 1380 El Camino (061430440), and 1400 (061422190 and 061422330). Unsecured property of $5K, $194K, and $401K, respectively. Total general property taxes of $18K, $15K, $12K, respectively. All are on major four-way intersections. All have service bays. Two have snack stores (not 1380).

    Now, imagine this were a claiming race. Anyone around here would pick the Chevron at 1200 El Camino because it was beautifully remodeled two years ago. Or maybe one of the Shells, since they both do a booming service business (and excellent work, from personal experience). But absolutely no one would choose the non-descript little Coast – let alone at a $10-15K/year handicap.

    And on to Draegers and Trader Joe’s. What has the Draegers in Danville – 44 miles away – got to do with the one in Menlo Park? What an odd way to do comparables.

    Draeger’s and Trader Joe’s sit two blocks away from each other along Menlo Avenue. Both properties have a 1975+2% pa land basis. Neither has a reflecting pool. (Both are starved for parking.) But Draeger’s added a story and remodeled about ten years ago – which triggered a reassessment. So why didn’t the locals comment on that online? Because everyone around here knows that there isn’t an 8X difference between the value of the two properties. And wonders why the prime Trader Joe’s property (on 2/3 acre) pays less than most of us do for our much smaller homesteads.

    The significant fact about the two properties is NOT whether it’s a Draeger’s or Trader Joe’s (both growing privately held California companies) – it’s who is benefiting from a sizable tax subsidy. Trader Joe’s is a tenant. Who’s getting the benefit of a 1975+2%pa property basis? The property owner. Not the owner in 1975. She died in 1995. Not her daughter in Massachusetts, she died in 1999. No, the current beneficiaries are the late daughter’s husband and his new wife on Cape Cod.

    Given that this property, in real dollars, is paying half what it was in 1978 towards local services – police, fire, roads, schools, courts – this subsidy drains money from our town (businesses and residents) and ships it east.

    Bad for local business? You betcha.

    You refer to cognitive dissonance – the psychological upset from holding two conflicting ideas – which is evident in your article. You want to believe that the current system is fair to small business owners and to communities. So you drag in all the other taxes you can think of and plunk them on the scales.

    Has it ever occurred to you that all those extra taxes are a desperate attempt to plug the hole created by extending Prop 13 ad infinitum to commercial property? That we are taxing everything in sight because people like yourself are blind to who the real winners are?

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  5. LVTfan (google it!)
    LVTfan (google it!) 13 November, 2010, 11:48

    Bravo, Jennifer. Facts are a fine thing!

    And I encourage all of you to explore a short abstract and a longer report, done in 2008 by the OECD, which came to my attention last week. Here’s what I posted on my blog about it last week:

    “Do tax structures affect aggregate economic growth? Empirical evidence from a panel of OECD countries

    This paper examines the relationship between tax structures and economic growth by entering indicators of the tax structure into a set of panel growth regressions for 21 OECD countries, in which both the accumulation of physical and human capital are taken into account.

    The results of the analysis suggest that income taxes are generally associated with lower economic growth than taxes on consumption and property. More precisely, the findings allow the establishment of a ranking of tax instruments with respect to their relationship to economic growth. Property taxes, and particularly recurrent taxes on immovable property, seem to be the most growth-friendly, followed by consumption taxes and then by personal income taxes. Corporate income taxes appear to have the most negative effect on GDP per capita.

    These findings suggest that a revenue-neutral growth-oriented tax reform would be to shift part of the revenue base towards recurrent property and consumption taxes and away from income taxes, especially corporate taxes. There is also evidence of a negative relationship between the progressivity of personal income taxes and growth.

    All of the results are robust to a number of different specifications, including controlling for other determinants of economic growth and instrumenting tax indicators.”

    The full study, 28 pages, is at http://www.oecd.org/officialdocuments/displaydocumentpdf?cote=eco/wkp%282008%2951&doclanguage=en

    Readers of this blog will know that I favor shifting to a tax on land value, and eliminating the portion of the conventional property tax which falls on buildings and other improvements to land. But I’m fascinated that their analysis shows that even taxing buildings and other improvements to land, along with land value, is superior to taxing consumption or personal income or corporate income, in terms of the effects on economic growth.

    So I’ll leave you with this question: if we know that income taxes and consumption taxes discourage growth more than the conventional property tax does, in whose interest is it that we not rely heavily on the property tax? Cui bono?

    Go to the root of the problem. Recognize who benefits from the status quo. They like the current system just fine, and will fund heavily efforts to conserve it.

    And when California (Proposition 13 forces reliance on wage and sales taxes to “protect” property owners) and other states, including soon Indiana, start complaining about a lack of economic growth, and when New York State’s new Governor Cuomo starts talking about “property tax relief,” understand that this is code for “we’ll take care of our friends who own the choice urban sites, the ordinary man be damned!” This is called conservatism. Like Aleve, it works for them. Does “landed gentry” still resonate?

    Notice that this study has been around for two years now. How many times have you heard about it? (It was news to me.) Even the “FairTax” (23%+ consumption tax) folks haven’t mentioned it, as far as I know.

    Source: http://lvtfan.typepad.com/

    To repeat: “Property taxes, and particularly recurrent taxes on immovable property, seem to be the most growth-friendly, followed by consumption taxes and then by personal income taxes. Corporate income taxes appear to have the most negative effect on GDP per capita.” So California has chosen to rely on dumb taxes, and place a cap on smart ones.

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  6. Jennifer
    Jennifer 14 November, 2010, 07:13

    From the “inside” — as a homeowner — it feels that we’ve replaced an understandable property tax with a thicket of parcel taxes, fees, assessments, and utility taxes. This process reminds me of going to a Farmer’s Market at opening time with nothing but $100 bills in my pocket. I know that I’ll have to either buy a whole lot of baked goods at one stall (including much that I don’t want) or walk by a lovely pure white cauliflower at the next, because I only have a fixed amount to spend and I don’t want to waste it.

    In the process of adding all this complexity, we’ve lost the ability to negotiate local spending — can you imagine trying to shift money from the county to our schools, even from the high school district to the elementary one?! Instead, every negotiation is with the voters — and always for more taxes, because who knows how to shift the old ones?

    Prop 13 was supposed to set up a basic entitlement (“stay in your home”) for older people. Like most social welfare, by creating an entitlement, it created a whole lot of people who felt entitled to it. Now there’s an industry — lawyers, appraisers, taxpayers advocates — all dedicated to the socialist principle that the established entitlement must be protected. If this creates a wildly uneven playing field for businesses — “well, too bad, works for us.”

    Why are we surprised that Prop 13’s socialist approach of shifting the whole burden of local services onto new entrants is driving business away?

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  7. Pancho3
    Pancho3 15 November, 2010, 08:04

    When did we cease to be American Citizens, and become slaves to the Public Employees and their Unions?

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  8. Jennifer
    Jennifer 15 November, 2010, 11:13

    Nothing strengthens a union more than a cyclical mix of good times and hard ones. Isn’t it interesting how Massachusetts in 1980 implemented property tax caps so differently than California had — entitling communities (not individual properties) to predictable, limited property tax growth. Their Prop 2-1/2 has also forced the citizens to prioritize and reprioritize where they want their tax money spent.

    Here in California we have a spurt-and-sputter local tax system that gushes when the property market heats up and dribbles when it cools. Unions, with their long time-frames and deep pockets, have learned to play this like a fiddle. In gush times they reel in “long-deferred” salary increases … and in bad times they circle the wagons around their members, reluctantly accepting non-immediate concessions (pensions, shorter hours) that bite us down the road.

    Since state income and sales tax revenue tends to increase cyclically with property values, state employees take their “comparables” cue from the locals, and vice versa.

    Reply this comment
  9. Jennifer
    Jennifer 16 November, 2010, 09:28

    Wayne, great news! You don’t have to believe what I say … you can see with your own two eyes. You’ve got the same situation near your house as we do near ours. Wildly disparate tax bills for competing businesses causing an unfair and uneconomic playing field — and the guy who’s paying the most is charging the least for gas.

    Google puts your home in Pasadena on Euclid. It identifies six nearby gas stations vying for your business:

    Mobil 290 S. Arroyo Pkwy
    Arco 445 E. Walnut St
    Shell 200 N. Fair Oaks
    Chevron 160 E. California
    Mobil 474 S. Lake Ave
    Kwik/76 122 N. Lake Ave

    You probably know them, but could drive by — or just refresh your memory by looking at them on Google maps. The first two appear to have snack food marts, but no service bays, the next three have service bays, the last doesn’t appear to have either.

    Their secured property tax bills range from $30,722 down to $4,018. As you correctly observe, some bills include buildings, some include fixtures, and some are bare land. But, as an appraiser, I bet you have bought the unsecured rolls (or could check them out at the Assessors) and can fill in the gaps for us?

    Meanwhile, however, let’s look just at the land values and sizes:

    Mobil 290 S. Arroyo Pkwy $ 838,751 14250 sf
    Arco 445 E. Walnut St $ 2,259,033 19385 sf
    Shell 200 N. Fair Oaks $ 237,414 25700 sf
    Chevron 160 E. California $ 218,328 30000 sf
    Mobil 474 S. Lake Ave $ 1,107,352 13320 sf
    Kwik/76 122 N. Lake Ave $ 494,643 19070 sf

    Sure seems to me that there is a very uneven playing field for these businesses. The Arco is clearly contributing more than a full share towards Pasadena’s schools, police, fire, courts and roads. The Mobil on S. Lake isn’t doing badly either.

    On the other hand, the Chevron on E. California (isn’t that Route 66?) seems to be riding on a super-discounted senior ticket.

    Meanwhile, I just popped over to losangelesgasprices.com and it looks like that Arco — the one that’s contributing the most towards local services and subsidizing senior citizens’ low taxes — also has the lowest price per gallon for regular ($3.05). But here’s the data as of 9:15 this morning:

    Mobil (Arroyo) $3.33
    Arco $3.05
    Shell (Fair Oaks) $3.39
    Chevron $3.29
    Mobil na
    Kwik/76 $3.15

    And here is the full list of secured tax bills and APNs:

    Mobil 290 S. Arroyo Pkwy $11,733
    Arco 445 E. Walnut St $30,722
    Shell 200 N. Fair Oaks $6,975
    Chevron 160 E. California $4,018
    Mobil 474 S. Lake Ave $16,891
    Kwik/76 122 N. Lake Ave $13,156

    Mobil 5722-13-035
    Arco 5723-005-041
    Shell 5723-021-022
    Chevron 5720-013-010
    5720-013-011
    5720-013-012
    5720-013-013
    5720-013-014
    Mobil 5327-001-003
    Kwik/76 5738-007-041
    5738-007-033

    The fact that the Chevron consists of five parcels is intriguing. Each could be left to a separate child or surviving grandchild of the current owner(s) and, at 2% appreciation per year in the assessment, it will be the year 2140 before the most valuable is reassessable and 2170 or later for the rest.

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  10. Steven Greenhut
    Steven Greenhut 16 November, 2010, 10:01

    There’s no doubt that Prop. 13 creates an uneven distribution of property taxes. My home taxes are much higher than my neighbors’ taxes, because they have lived there for 25 years. Foes of Prop. 13 have a solution — raise everyone’s taxes dramatically! We’ll all be equal, but most of us will be much poorer.

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  11. Jennifer
    Jennifer 16 November, 2010, 14:30

    Pshaw, Steven. Though it’s fascinating how “supporters” of Prop 13 immediately switch the topic to residential real estate. And pretend that other solutions, e.g., Massachusetts’ Prop 2-1/2, don’t exist. Such solutions maintain parity between property owners AND control overall spending.

    Bottom line: every resident is getting poorer as a small group of commercial real estate owners take 800% advantage of Prop 13. In Los Angeles County, per the Assessor’s annual report, Commercial/Industrial property has fallen from 46.6% to 30.8% of the total roll.

    Why? Why don’t you analyze it and find out? You’ll discover that some of the change is exogenous (falling value of the homeowner’s exemption, land use changes), but a lot of it is the ability to transfer business property ownership without incurring reassessment.

    The effects? First, an uneven and economically unsound playing field for business property — serving as a disincentive for new or growing businesses to expand in California. Second, disintegrating public schools and state-wide fiscal instability — which further discourages new businesses. Third, incentives for public employee unions to tighten their grip on their members.

    Business property should be reassessed every 15-20 years if it hasn’t gone through an arm’s length transaction. Why are we handing one in five commercial property owners an 80% tax subsidy — and strangling residents and local businesses in the process?

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  12. Steven Greenhut
    Steven Greenhut 16 November, 2010, 15:18

    Ultimately, you are lobbying for massive tax increases for commercial users, which will harm an already unsteady business climate in the name of equality. The new tax revenues your proposal would raise would be squandered by the Legislature and the end result would be much higher property taxes for businesses in order to fund our bloated government, which is not what the state needs, and certainly not now during a recession.

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  13. Jennifer
    Jennifer 16 November, 2010, 17:53

    Steven, has it escaped your attention that the already unsteady business climate is further upset by the deep deficit we are already running? $24B by latest count? $4B — a significant amount of which is flowing out of state — might stabilize the ship a little, while spending cuts do more. And taking that from landlords who are currently paying half of what they did, in real dollars, in 1978 makes good fiscal sense.

    You, meanwhile, are lobbying for the collapse of California. Who, exactly, does that benefit?

    Reply this comment
  14. Steven Greenhut
    Steven Greenhut 17 November, 2010, 08:19

    It obviously hasn’t escaped me, Jennifer, which is why I push for pension reform, budget reform and all the many other reforms that legislators refuse to embrace because it means taking on the unions and special interest groups that benefit from the current mess. They don’t want to fix a broken system, especially when they have activists like you who can champion massive tax hikes that would continue to enable the spendthrifts to keep behaving as they have been for years! Seriously, do you think the current political establishment will change its ways if it gets billions more in tax revenues, or do you think they will just keep spending until they need even more cash? Then they’ll find new places to raise revenues.

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  15. Jennifer
    Jennifer 17 November, 2010, 18:50

    Bravo, Steven — and while you are pushing to fix the spending side of the broken system, I am pushing to fix the revenue side. Had you spent any time in business, you would understand that this is how businesspeople approach problems of this kind. No business survives for long by fixating on expenses.

    Meanwhile, haven’t you observed how Prop 13 has fed the union machine? Where were you in 1978? When did you come to California? Prop 13 has both lulled homeowners out of our local debates (or are you unaware that property taxes fund local services?) and created gush-and-sputter funding that strengthens unions. When the property market tanks (like now), unions circle the wagons to protect their employees — when it rebounds, they’re first at the spigot. Who wouldn’t join a union in a state with an unpredictable revenue flow?

    But perhaps you ARE an avid supporter of a Prop 2-1/2-like structure (after all, it was those Bay Staters who staged the first Tea Party)? There, community tax growth is strictly capped and individual properties maintain appropriate value parity, rather than creating personal entitlements. As a result, the citizenry has to stay involved in decision making — and, amazingly, they’ve managed to maintain a school system that turns out educated productive residents for tomorrow.

    In the meantime, appreciate that it’s homegrown analysts like me who keep your institute funded! Imagine if there were no one questioning the billions in subsidies that benefit a small percentage of commercial landowners. Horrors.

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  16. Mary Gribble
    Mary Gribble 17 November, 2010, 21:02

    Jennifer, did I understand the concept correctly? Does Ms.Jennifer believe weakening Proposition 13 for business owners, (strapped homeowners will not follow), does not suggest she also believes that while the(electorate)cat’s away, the mice (State Legislature) will not play? Citizen taxpayers cannot realistically keep score. They are given scanty data, many opposing facts are stricken from the record and countless obstacles exist to discovery of what is going on in Sacramento. Hard common sense dictates that the one way to stop a drunken sailor does not include endless missions of mercy in the belief that he will soon give up the bottle, but prevention of the chaos (to taxpayers), also gifting the happy drunk with wisdom by refusing to load his already adequately lined bell-bottoms with more cash. What does she think of this idea: interest investigative watch-dogs to document where and to whom the tax dollars were sent, (not an unsophisticated assignment), then let the buyer beware? Why are our US jobs being outsourced? Same road block as in California: unions. They once protected what was slave-like labor, but today, they have overstepped this line with un-pretty consequence. .

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  17. Wayne Lusvardi
    Wayne Lusvardi 17 November, 2010, 21:08

    Jennifer – You are not to my knowledge a certified commercial property appraiser. I was an appraiser for 20 years. You should not try to evaluate fair property tax assessments for complicated commercial real estate which you do not understand. As I stated in my above article, just because YOU find some inequality in property tax between two properties means nothing. As I explained gas stations are on leased land. So the landowner and the gas station lessee may be taxed separately. So it just may appear that the tax on a gas station is lower when it is not.

    Also commercial properties are not like residential properties which typically have only one use. Commercial properties have MANY uses allowed under the zoning codes. If there is a 100-year old house used for renting rooms on commercial zoned land which use should get taxed? Residential or commercial? There are different types of gas stations: gas stations with retail food stores, with billboards, with auto repair shops, with tire shops, or just pump gas. Each different type of gas station is typically located on different types of properties. Key corner properties on major arterial roadways with high traffic counts near a freeway offramp are the best sites. Minor corner properties in an older neighborhood are the least desirable for gas stations. These are complex issues which only those qualified can understand.

    That is the beauty of Prop 13 – a sale, is a sale, is a sale. Whatever the property last sold for sets the assessed value and that base value is not increased until the property is re-sold. The assessment ratio however is typically increased by 2% per year. That is the way capital gains taxes work on stock. If the paper value of stock goes up one day should you be taxed on that value which you never realized? NO!!!!!!! Capital gains taxes only apply when stock is sold and you realize a profit (or loss). It is the same way with properties under Prop 13.

    Prop 13 is a TAX, not a welfare benefit. AS I STATED IN MY ARTICLE YOU HAVE TO LOOK AT THE WHOLE TAX BURDEN NOT MERELY PROPERTY TAXES. The overall tax burden in California is the highest in the nation by any measure. California has a spending problem not a revenue problem.

    Jennifer, there is no amount of information that I could present to persuade you otherwise. You would just keep sending long emails and try and find reasons to support your belief that Prop 13 is a welfare benefit. This response is merely for third parties reading this website to evaluate for themselves. Nonetheless, best wishes to you.

    Reply this comment
  18. Jennifer
    Jennifer 18 November, 2010, 06:40

    Well, Dear Readers, Wayne has laid it out in a nutshell. You get to choose! Wayne is a certified commercial property appraiser who will tell you what to believe. I am a stay-at-home mom who has given you the APNs (assessor parcel numbers) and Google map information so you can look decide for yourselves. (And who got the local unsecured rolls to make sure that she captured all the lessee information in her own examples.)

    You do have a choice — meekly accept what you’re told by An Expert or look for yourselves! It isn’t hard. Many county assessors now provide parcel maps and assessment information online. Google maps’ street view and overhead views will supplement your own knowledge of the business property around you. And, to get the lessee data, call your assessor’s office — with a little prodding, they put that online, too!

    And, yes, ladies — before we ladle on the WHOLE tea party, we always make sure the table is level and the cloth is flat, don’t we?

    Reply this comment
  19. David from Oceanside
    David from Oceanside 22 December, 2010, 12:15

    Jennifer,

    As a stay at home mom what time is left for your kids after your efforts in exposing the writers and bloggers here on this site?

    If you have not already figured this out let me help you. No one cares about the comment section and not once has an opinion been changed as a result of a comment section.

    Don’t believe me? Check out the comment section of the North County Times Oceanside section for more than a month and you will find the same people professing their opinion with passion and the same others with their opposite opinion. Nobody and nothing changes as a result.

    Do your kids a favor and put away the keyboard.

    Reply this comment

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