The Los Altos City Council last week unanimously opted to postpone its vote on a resolution supporting Proposition 13 reform.
According to a city staff report, the San Francisco-based organization Evolve approached the city earlier this year seeking support for reform of the proposition, which capped residential and commercial property-tax rate increases to 2 percent annually, beginning in 1978. The proposition also calls for the reassessment of sold properties at 1 percent of sale price, with increases capped at 2 percent annually in future years.
Evolve’s website states that it specifically seeks to reform commercial property tax loopholes in Proposition 13. Organizers explained that the proposition currently allows commercial property buyers to keep a property’s old tax rate by dividing the purchase among several parties. Sold properties are not reassessed if any party’s ownership share is less than 50 percent. The organization added that commercial property taxes currently account for 28 percent of all property taxes paid in the state, compared with 40 percent when Proposition 13 passed in 1978.
The council’s decision to delay its vote to an undetermined date came after representatives of the Los Altos Village Association (LAVA) and the Los Altos Chamber of Commerce requested more time to study the issue and formalize their respective stances.
Los Altos Chamber of Commerce Board Chairman Barry Groves urged the council to postpone a final decision on the resolution until September “to give us an opportunity, as a chamber, to look at this and come back to you with the opinions of our business owners and leaders.”
“There is no urgency for this. As was mentioned (previously), there is no proposed legislation at this time, or a proposed initiative that is gathering signatures,” said Groves, who added that the chamber received several calls from local business and property owners expressing concern about the issue ahead of the July 22 council meeting.
LAVA Executive Director Nancy Dunaway told the council that a change to Proposition 13 could lead to unintended consequences for local commercial property owners and others.
“One of the things I can personally think of is higher rents for our tenants – or passed on in the form of higher prices to our community,” said Dunaway, who asked the council to postpone a vote until its Aug. 26 meeting so that LAVA could form “a position and a better understanding of the proposed amendment.”
The council ultimately agreed with a delay, but not before some members expressed their support for taking another look at the property-tax regulations established by Proposition 13.
Councilwoman Jeannie Bruins, for one, noted that her support for the resolution is meant as a general statement that “something needs to be done.”
“It’s not about what – it’s just the idea of something,” she said. “It does not constitute, for me, any indication of support for any particular language or ballot measure.”
Mayor Megan Satterlee also noted her general support for re-examining the proposition at the state level.
“This is merely to provide support for the notion that (Proposition 13) needs to be studied and it needs to be reevaluated,” Satterlee said. “That’s the only reason I ever wanted it put on the agenda. I think the (state) legislature needs to hear that they need to take a look at this and figure out what might be a better mechanism.”