NEWS: NEWS ALERT: Real Estate Industry Targeted On November 6th Ballot

Posted October 30th, 2018

Op-ed: Real Estate Industry Targeted On November 6th Ballot

October 30, 2018|Samuel K. Freshman, BizFed Co-Chair, Land-use/Housing/Development/Real Estate Committee

Editor’s note: The Business Journal is publishing the following op-ed by the Los Angeles County Business Federation (BizFed) because we are in agreement with the organization’s positions on state Proposition 10 and county Measure W.

High housing prices, ever increasing taxes and fees, and burdensome government regulations are the top reasons that businesses are leaving Los Angeles County and California. Yet politicians and voters keep coming up with ways to make it more expensive and riskier to invest here. As owner and founder of Standard Management Company and working in the real estate business for over 55 years, I have never seen the Real Estate and construction industries so under attack as they are today.

The huge ballot that voters are grappling with on November 6 includes 11 statewide propositions and a myriad of local measures, many aimed squarely at forcing businesses to pay what amounts to a penalty for investing in local economies, creating jobs, and providing goods and service.  Specifically, the Real Estate industry needs to oppose Proposition 10, which would open the doors for cities across the state to enact their own rent control rules, and Measure W in L.A. County that would assess a parcel tax of 2.5 cents per square foot of impermeable property.

Proposition 10 opens the door to have 500 different policies on rent control across this state, creating investment uncertainty. That uncertainty will reduce housing production and thereby making both market rate and affordable housing development more expensive and, in many cases, not pencil out. Developers and landlords will have to deal with up to 500 different Rent Control Boards with different rules in different cities. Rent control is bad for anyone who wants to develop more housing – that includes businesses and renters who claim to be seeking relief from California’s high cost of living. We all know that nothing will provide that relief without increasing our housing supply.

In Los Angeles County, we have the half-baked tax grab of Measure W. A forever tax on all property owners [there is no sunset clause], the County says this measure will add about $83 per year in tax burden to the average homeowner. Business properties – which are generally much larger and have less landscaping – will pay much more. L.A. County provided estimates of what the 100 largest properties would see on their new tax bill – the lowest is a $60,500 increase with the largest business paying an additional $2 million a year – FOREVER. Property owners who lease their space will pass this increased cost along to their tenants, making it that much harder for small- and medium-sized businesses to succeed. On the multi-family side, a tax increase will only make rental housing more expensive too, further exacerbating the housing crisis we all seek to solve.

These types of taxes and regulations are what are making both the cost of living and the cost of doing business in Los Angeles County one of the most expensive in the Country. Join BizFed and Vote NO on Prop 10 and NO on Measure W.

With the rise in populism on the right and the left, the voters most likely to show up at the polls are also the ones most likely to see businesses and property owners as a “piggy bank” from which to draw unlimited funds. We need housing, stores, office buildings, and warehouses to have a healthy economy and jobs – yet proposals like Measure W in L.A. County and the statewide Proposition 10 would weaken our ability to invest in the Los Angeles County market. All of us in the Real Estate Industry and anyone who cares about supporting business in Los Angeles County should join me in voting no on Proposition 10 and Measure W.

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Samuel K. Freshman is the Co-Chair of the Land-use/Housing/Development/Real Estate Committee of the Los Angeles County Business Federation, BizFed, which is a grassroots alliance of more than 175 business organizations representing 395,000 businesses with nearly 4 million employees throughout L.A. County. He is also the Chairman of Standard Management company, which was originally involved in the management and leasing of approximately one million square feet of office properties in the Los Angeles area. For the past ten years, Standard has acquired multifamily properties, shopping centers, and land development projects.

This Opinion was published online on the Long Beach Business Journal.

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