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Staff Blog

The Commercial Property Empire Strikes Back

Jeffrey Pu

Still more evidence emerged this week that the California tax code is riddled with loopholes that favor large commercial property owners. Last Wednesday the state Supreme Court ruled against the Alameda Unified School District's Measure H, a parcel tax that set a flat rate of $120 for residential properties and small commercial properties and a graduated rate of $0.15/square foot for commercial properties larger than 2000 square feet. 

Taxing different types of properties at different rates is a common practice for school districts and special districts and the success of the Alameda lawsuit will lead to legal challenges across the state. David Brillant, the plaintiff’s attorney in the Alameda case, has already filed lawsuits against the San Leandro, West Contra Costa, Davis, and Centinela Valley School Districts.

As we pointed out last month, the sum of Prop 13 and lawsuits like this one has greatly reduced the share of property taxes paid by commercial property owners and increased the burden on homeowners and working families. According to Brillant, “Taxpayers should be pleased with this result.” We think the 67% of Alameda taxpayers that voted in favor of the tax probably think otherwise.

The situation is dire. The Alameda School District will have to refund all but $90,000 of the $18 million it collected under Measure H, a result that Alameda Superintendent Kirsten Vital called “a significant blow to our budget with many negative consequences for our students, teachers, and staff.” And Brillant is just getting started. If his other lawsuits succeed, schools will lose tens of millions of dollars in funding that was approved by more than two-thirds of voters.

The need to reform Prop 13 and to regularly reassess non-residential commercial properties has never been more clear. Prop 13 should protect homeowners, not corporations.