Ballot Measure Outcomes
California ballots in this year’s election included various propositions, measures, and proposed rules and regulations that touch upon commercial real estate.
Los Angeles Mansion Tax Approved
The most high-profile of the city’s ballot measures, United to House L.A., also known as the “Mansion Tax” passed by a healthy margin. Now approved, the measure will increase taxes on the sale of commercial and residential properties valued at $5 million or above in Los Angeles County. The new fees will be levied at the time of sale at a rate of four percent for properties between $5 million and $10 million, and 5.95 percent for those $10 million or above.
Passed Ballot Measures in Southern California
- City of LA, Measure LH – The approved measure will give public entities in the city of Los Angeles authorization to build, develop, or acquire up to 5,000 additional publicly funded affordable housing units in each city council district. This was aimed to address the homelessness crisis and promote the construction of low-income housing. Purchasing these buildings from property owners would also benefit commercial real estate owners.
- Santa Monica Measure RC – Amid soaring inflation in near mid-June, rent increase caps reached a high. This rent control measure was passed to reduce Santa Monica’s maximum annual rent increases and allow the Rent Control Board to freeze hikes under declared emergencies. According to The Real Deal, the amount of rental increase in rent-controlled units in the city is now at 3% annually, compared to 6%.
- Pasadena Measure H – Approved by a majority of voters, the measure will work to create a first-of-its-kind rent control policy and institute new protections for renters in the city of Pasadena. However, this may mean additional regulations can be added on for how much and how often local governments can charge for rent. CRE investors anticipated rent control interventions would discourage new entrants into the multifamily market and make businesses harder for those already in it.
Passed Ballot Measures in Northern California
- South San Fransisco Measure AA – The city voted in favor of affordable housing with Measure AA, which will authorize the development and construction of low-rent housing up to 1% of the existing units in the city, for an eight-year period, nor will it result in a tax increase.
- San Francisco Proposition M – Voters helped to pass this measure which will levy a tax on units of vacant residences. If a unit sits vacant for 182 days or more in one year, its owner would be required to pay the city an additional tax. The measure is supported by those who argue it will encourage landlords not to sit on properties, waiting for better rates.
