CRE Ballot Initiatives to WatchPosted by: jhon | Posted on: October 28, 2020
While most people are attuned to the Presidential, Senate and House races next week, there are many critical state and local issues on the ballot on Nov. 3.
In a blog post Toby Burke, the senior director of State and Local Affairs for NAIOP, points to two ballot initiatives that will significantly impact commercial real estate by restructuring property tax revenues within their respective states.
In California, residents will vote on Prop 15. If it is adopted, it will increase the property taxes on commercial and industrial properties by an estimated $11.5 billion, according to Burke.
In Colorado, the 1982 Gallagher Amendment established a statewide mandate that the ratio between residential and commercial property tax collections is 45% to 55%, which places a high tax burden on property owners, according to Burke. Amendment B would repeal the ratio requirement under the Gallagher Amendment.
Also, Burke says several ballot initiatives are focused on raising additional revenue for education and other programs.
In Arizona, Proposition 208 would levy an additional 3.5% tax on annual income for individuals making over $250,000 and married couples filing jointly, making over $500,000 to increase public education funding. There is a measure on the ballot in Illinois that would repeal the state’s constitutional requirement for a flat income tax. If adopted, the flat income tax rate would be replaced with a new graduated tax rate based on income, according to Burke.
There are also local ballot measures that will affect CRE. In Austin, Proposition A will establish the local property rate and dedicate a portion to fund the operation and maintenance of the city’s high-capacity transit system, according to Burke. With Proposition B, a separate measure, the city could borrow $460 million in bond funding for infrastructure projects, including sidewalk construction and repair.
A measure to promote economic development, community revitalization and job creation is on the ballot in Baltimore, according to Burke. If approved, Proposition C will fund a two-year community and economic development loan program through $38 million in bonds.
While state and local ballot measures are critically important, federal decisions can impact an entire sector nationally. Many in the net lease business are watching the Presidential race to see what happens to the 1031 exchange.