Business
New Study Finds Prop. 15 will Not Harm Small Businesses In California
Research disproves misinformation that initiative would have negative impact on small businesses
By Anthony Matthews
A new report recently released found that Proposition 15, the Schools and Communities First ballot measure, would not impact the cost of small business rents for the roughly 80% of businesses renting their place of business or raise property taxes for the vast majority of commercial properties. The study was conducted by Beacon Economics LLC for Silicon Valley Community Foundation.
“Most claims about Proposition 15’s impacts on small businesses are unfounded. Our analysis shows that this initiative will not strain small business owners with skyrocketing rents and should actually affect small businesses very little,” said Christopher Thornberg, founding partner of Beacon Economics. “Entrepreneurs will want to remain part of California’s high-performing, innovation economy and, should it pass, this initiative won’t change that.”
The study found Prop. 15 will not impact small business renters, including triple net lease tenants. An analysis of nearly 12,000 properties in 12 counties found reassessment after a property sale does not increase business rents for retail properties, warehouse properties, and research and development properties. Office space tenants are an exception where this can fuel rent increases of 0.1% each year. In other words, the reassessment of a commercial property after 20 years could cause a one-time 2% rent increase for an office space tenant.
Other key findings of the report include the following.
- Prop. 15 won’t impact two-thirds of commercial properties. In a random sample of over 22,000 commercial property transactions in 12 counties during 2018-2020, 66% of commercial property sales were under $3 million and would be exempt from Prop 15.
- Of nearly 1 million businesses in California, 56% have fewer than 5 employees, 17% have 5-9 employees, and 12% have 10-19 employees.
- Prop. 15 would restore equity to property taxes since homeowners now pay 72% of property taxes relative to businesses. In 1978, it was 55%. In Los Angeles County, commercial properties paid 46% of property tax in 1978 but paid just 28% in 2017.
“Commercial rents are based on many market factors but property tax is not one of them. If it were, reassessments would trigger rent increases and there is no evidence of this,” said Taner Osman, research manager at Beacon Economics. “Small businesses typically require less space to operate so they tend to occupy relatively less expensive properties. This is why most small businesses purchasing their place of business will not be impacted by Prop. 15.”
“For the first time, we can separate fact from fiction about Prop. 15 impacts on small businesses,” said Walter Wilson, CEO of the SIlicon Valley Minority Business Consortium. “Armed with this new material, we can keep lies of impending doom in check and know that, whatever fate this initiative faces, there is no need to fear for the future of our small business community.”
“Small business owners are active members of their communities. They want the place they call home and build their business to do well,” said Tara Lynn Gray, President and CEO of the Fresno Metro Black Chamber of Commerce. “This report shows small business owners the choice about Prop. 15 does not pit the interests of their business and community against each other.”
“This report shows a single ballot initiative will not change how businesses negotiate leases. Like other businesses, landlords set rent prices based on supply and demand,” said John Ballon, owner of Two Enlighten in Glendale. “Right now, demand for office space is in decline. I recently renegotiated my lease for nearly a third less than what I was paying before the pandemic. My landlord said my moving out was not an option and she would ‘do what it takes to make it work.’”
“With the potential to unlock $12 billion to benefit local governments and schools, Proposition 15 is one of the most significant ballot measures facing California voters this November,” said Gina Dalma, executive vice president of community action, policy and strategy at Silicon Valley Community Foundation. “Together with Stupski Foundation and other generous supporters, Silicon Valley Community Foundation has invested in independent and objective research that produces clear, data-driven information to help inform voters about the potential impacts of Proposition 15. This study from Beacon Economics has indicated a clear finding that there is no significant relationship between reassessments and an increase in commercial rents, further invalidating misinformation that claims Proposition 15 would harm small businesses.”
Prop. 15 would require most commercial properties, except those valued under $3 million, to be taxed at fair market value through reassessment every three years. The revenue would be directed to K-12 public schools, community colleges, and local governments. Currently, property taxes on commercial properties are based on property values at the time of purchase with a cap on increases.
Business
Inland Empire Regional Chamber of Commerce to Lead California Delegation at GITEX GLOBAL 2023 in Dubai
Fostering Technological Synergy: Bridging the Tech Gap with Global Partners
Demonstrating the Inland Empire Regional Chamber of Commerce’s (IERCC) commitment to global tech collaboration and innovation, the organization will lead a California delegation to the world-renowned GITEX GLOBAL event in Dubai from October 16-20, 2023. Though the original invitation extended to IERCC’s President & CEO, Mr. Edward Ornelas, Jr., he will not be in attendance. Instead, the California delegation will be spearheaded by the Chamber’s newly-appointed CTO, Mr. Gabriel Rangel.
Organized by the Dubai World Trade Centre, GITEX GLOBAL 2023 promises to be grander than ever. The event is set to host over 6,000 exhibiting companies and startups, drawing more than 170,000 tech and business executives from over 170 countries. The mega-event will sprawl across 41 vast halls and, for the first time ever, will be held at two prominent venues – the iconic Dubai World Trade Centre and the new Dubai Harbour for Expand North Star, making it the host for the world’s largest startup event.
Mr. Edward Ornelas, Jr. commented, “While I regret not attending GITEX personally, I am proud to have Mr. Rangel at the helm of this effort. I’m confident that our delegation will foster new collaborations and present the Golden State as a tech powerhouse.”
This year’s conference adopts the compelling theme of “The Year to Imagine AI in Everything”. Attendees are poised to witness the grandest showcase of AI tech giants and industry frontrunners. Additionally, it promises to kindle profound dialogues and debates concerning the socio-economic implications of burgeoning AI technology.
“Leading the California delegation at GITEX offers us an unmatched platform to nurture and solidify relationships with global tech partners,” said Mr. Gabriel Rangel, CTO of IERCC. “As the technology landscape continues to evolve, it’s critical for us to be a part of these international collaborations. I’m honored to spearhead this mission on behalf of the Inland Empire Regional Chamber of Commerce.”
An integral part of the California delegation, Mr. Ram Thanapandian, Principal Technology Consultant to the State of California and Chair of CA State Treasurer Fiona Ma’s Technical Advisory Commission, will be present, providing invaluable insights and representing the State of California Treasurer’s Office.
IERCC’s leadership in organizing this delegation underscores the crucial role that California plays in the global tech ecosystem and mirrors Dubai’s ambitious vision as encapsulated in the Dubai Economic Agenda (D33). This strategy aims to substantially expand Dubai’s economic landscape in the upcoming decade, securing its stature among the world’s leading global cities.
Trixie LohMirmand, Executive Vice President of the Dubai World Trade Centre and CEO of KAOUN International, remarked on the invaluable contributions the California delegation will bring to the event. She looks forward to an event marked by knowledge-sharing, collaboration, and pioneering discussions.
For additional information on GITEX GLOBAL 2023, please refer to: GITEX 2023 Preview.
Coming October 5th
Economic Horizon 2024: What Lies Ahead?
The Inland Empire Regional Chamber of Commerce, in collaboration with Beacon Economics and the County of San Bernardino, is thrilled to announce that the anticipated economic forecast conference, Economic Horizon 2024: What Lies Ahead, Inland Empire? will be held October 5th from 3:30 PM to 6:30 PM at the El Prado Golf Courses in the vibrant city of Chino, California.
Esteemed economist, Dr. Christopher Thornberg will present complete outlooks for the U.S., California, and Inland Empire economies. “The Inland Empire stands at the crossroads of remarkable economic opportunities and challenges,” said Thornberg. “I’m excited to unpack the trends and shifts that will define the region’s economic landscape in the next year, and beyond.”
Known for his razor-sharp observations, and fun, energized delivery, Thornberg’s presentation will include pointed discussions about inflation, the Fed’s next move, housing markets, strengths and instabilities in the economy, and what current trends mean for the nation, state, and local region.
The conference will also be graced by the insights of California State Treasurer Fiona Ma as keynote speaker. In her words, “The strength of California’s economy is deeply interwoven with the growth trajectories of its regions. The Inland Empire, with its dynamism and resilience, is a testament to this synergy. I am honored to join ‘Economic Horizon 2024’ and share a vision where policies, partnerships, and potentials converge to elevate the Inland Empire to unprecedented economic heights.”
“This conference is a testament to the collaborative spirit of the Inland Empire and our commitment to fostering a robust, resilient economy,” said Edward Ornelas, Jr., President of the Inland Empire Regional Chamber of Commerce. “Our partnership with Beacon Economics and the County of San Bernardino aims to offer a platform for profound economic discussion, forecasting, and strategic future planning.”
Attendees can anticipate not only expert insights into the economy but also networking opportunities and a chance to connect with key business, government, and nonprofit leaders from across the region.
Full event details are available at: economy.iechamber.org
Bizz Buzz
Webb Investments acquires Silver Creek Industries, an industry leader in modular construction for schools
Webb Investments today announced the launch of a new company, Silver Creek Modular, after acquiring the assets of Silver Creek Industries, a highly respected modular construction company known for bringing innovative, sustainable and cost-effective solutions to the education industry.
Silver Creek Industries’ existing business, including its employees and its Perris, Calif., manufacturing facility, will remain with the new company, with Webb providing the investment capital, resources and expertise to enhance Silver Creek’s presence in the modular construction marketplace.
The acquisition closed in June of 2023, following Silver Creek Industries’ Chapter 11 filing in the Central Bankruptcy Court of California.
“We are thrilled to have the opportunity to bring Silver Creek into our family business, and look forward to building on our shared commitment to improving educational opportunities within communities across our region,” said Kiana Webb, CEO of Webb Family Enterprises. “This acquisition aligns with our strategy to invest in established firms that can help us drive community revitalization and inclusive growth, while improving quality of life and increasing economic output.”
Silver Creek Industries was founded in 2004 and has completed more than 1,000 projects in the education, commercial, medical, military, government and multi-family housing markets. More recently, the company’s focus has been on providing high-quality, sustainable modular buildings for schools and educational institutions. Silver Creek Industries is well known for delivering projects on time and on budget, with minimal disruption to school and the community.
Webb Investments is a privately held, family-owned company focusing on creating a community development ecosystem that drives inclusive, organic growth and transforms the areas they serve.
For more information on Webb Investments, please visit webbinvestments.com.
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