How Would Prop. 15 Impact Riverside County?

RIVERSIDE COUNTY, CA — There’s a lot of rhetoric surrounding PropositIon 15 on the November ballot. If passed, the statewide "split roll" initiative promises to raise billions in tax revenue that will go to school districts, cities and counties at a time when the coronavirus pandemic is hurting budgets.

But what does Prop. 15 mean to Riverside County? How many local properties would be impacted and how much money do local jurisdictions and school districts stand to gain if the initiative passes?

That’s what we set out to answer.

First, just what does Prop. 15 do? It requires that commercial properties be reassessed at market value at least every three years — something that hasn’t been happening unless a property is sold or improved. The tax of 1 percent of value, with 2 percent annual increases, would still apply.

There would be no change in Prop. 13’s rules for residential properties. It only impacts commercial and industrial property owners.

Agricultural land, and owners whose commercial and industrial properties are worth less than $3 million total, would be exempt under Prop. 15.

Generally speaking, Prop. 15 proponents contend the initiative closes an unintended tax loophole that some commercial and industrial property owners have enjoyed because their properties have not been reassessed for decades. Opponents say it will end up hurting businesses struggling to survive.

In Riverside County, there are a total of 36,941 commercial and industrial properties, according to an analysis of Prop. 15 from the office of the Riverside County Assessor-Clerk-Recorder. The 10-page document shows that about one-third of these properties would need to be assessed annually if Prop. 15 passes. Initially, this would bring an additional $136 million in property tax revenue to Riverside County.

But, once the initiative was fully phased in (in about three years), with ongoing reassessments across all applicable commercial and industrial properties, the county would see $407 million in additional revenue, according to the county analysis.

Under Prop. 15, the added tax revenue projected in Riverside County after the phase-in would be doled out this way: $200 million for cities and special districts; about $163 million for local school districts and community colleges; and approximately $44 million to the county, according to the county assessor analysis.

Not all of this money would come to Riverside County. Of the total collected, about 60 percent would stay local; the rest would go to the state.

Also, there would be costs incurred to collect the taxes, according to the county analysis. Annual costs at the Riverside County assessor's office would “increase significantly due to market-based reassessments of all commercial and industrial properties. The number of appeals per year is estimated to dramatically rise as well,” according to the analysis, which estimates a one-time cost of $1.1 million with increasing costs of up to $9.4 million annually.

The county analysis does not form an opinion on Prop. 15, but rather it is a document that lets the reader make the decision.

"The split roll initiative would impact the majority of commercial properties, providing tax exemptions for the following: the first $500,000 of a business's personal property or 100 percent of a business's personal property when the business has 50 or less full-time employees," the document summarizes. "Additionally, properties of businesses whose holdings in the state are valued at less than $3 million will be taxed based on their purchase price instead of market value. The split roll system would be phased-in over three years. Each property would thereafter be reassessed every three years."