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Report: Fair Market Value Assessment of Commercial and Industrial Properties Benefits All Counties

Updated: Feb 17, 2020

Report validates Schools & Communities First approach to reclaiming revenue locally for schools and local services, would primarily affect only a fraction of commercial and industrial properties

Elected leaders throughout the state speak out about why this reclaimed revenue is needed for schools and local communities

A research team at the University of Southern California (USC) released a report showing that every county in California stands to benefit from ensuring commercial and industrial properties are assessed at fair market value, as is proposed by the Schools & Communities First initiative. Moreover, such a reform would primarily affect only a fraction of commercial and industrial properties throughout the state, with an estimated 78% of the revenue coming from only 6% of commercial and industrial properties.

This report validates the Schools & Communities First initiative, showing that Californians can bring back resources to their communities for schools and local services while protecting homeowners and small businesses by closing corporate property tax loopholes.

The report estimates that between $10.3 and $12.6 billion would be reclaimed in California every year. The regional breakdowns, as shown on page 6 of the report, show:

Region and Reclaimed Revenue (range)

Los Angeles County: $3.1 – $3.75 billion

Bay Area: $3.83 – $4.61 billion

Central Valley: $343.8 – $447.7 million

Inland Empire: $669.6 – $848.9 million

Central Coast: $516.8 – $628.1 million

San Diego and Imperial Counties: $562.3 – $727.2 million

Orange County: $890 million – $1.1 billion

Upstate/Northern California: $100.7 – $130.5 million

Sacramento Area: $239.7 – $316.6 million

Central Sierra: $28.6 – $36.4 million

The report, on page 9, also shows that such a change would primarily affect a fraction of commercial and industrial properties in the state that have overwhelmingly benefited from corporate property tax loopholes: An estimated 78% of the reclaimed revenue would come from only 6% of commercial and industrial properties.

Throughout California, local elected leaders emphasized the importance of what these numbers mean and how critical it is that more resources get sent back into the communities by closing corporate property tax loopholes:

“This is a choice between perpetuating a tax break for the wealthiest corporations in our state or expanding the critical local services to reduce homelessness, reduce emergency wait times and improve our neighborhoods – at zero cost to residents. These numbers show just how critical of a choice this is.” – Los Angeles Mayor Eric Garcetti

“We've made a lot of progress in our city, but there's still much more work to be done. We can't afford to continue allowing corporations to avoid paying their fair share while our students and neighborhoods struggle to get by. I've seen how far even a minor increase in our city's budget can go. That's why these numbers are so encouraging and why we have to pass the Schools & Communities First initiative.” – Stockton Mayor Michael Tubbs

“This measure will close an egregious loophole and begin to restore basic fairness in our tax system. Corporations in California have been using loopholes to avoid paying their fair share for far too long while our schools and communities have suffered as a result. This funding will go a long way in ensuring that our communities have what they need to thrive. This is money that can be invested into tackling issues of housing affordability and homelessness, mental health, parks, ensuring we have clean water, creating job training programs, and meet the needs of our most vulnerable community members. Reclaiming this funding will have a positive impact across San Diego — and California — into perpetuity without raising taxes while protecting homeowners.” – San Diego County Supervisor Nathan Fletcher

“I am amazed at the new numbers that could have positive implications for farmworker communities and San Joaquin Valley counties with these additional resources. The four poorest communities in the state are in Fresno County. Communities like Huron have been ignored for much too long and it is always due to the lack of resources. Now we see how a corporate property tax loophole has enabled these inequities. For this reason, I'm proud to support the Schools & Communities First initiative and prioritize our students and neighbors. The resulting resources due to this initiative will have huge impacts. Our local community leaders will be able to tackle critical issues that have gone overlooked because of lack of resources.” – Huron Mayor Rey León

“Year after year, our cities struggle to fund the services our residents and families need. With so few local revenue options, we’re often forced to make impossible choices between housing, infrastructure, and critical community services. Schools & Communities First will ensure all corporations pay their fair share so we can pay for the things our neighbors need in order to thrive.” – Oakland City Councilmember Nikki Fortunato Bas

“In Alameda, as in the rest of the state, the funding situation is dire. Special ed class sizes are too high and we have problems attracting and retaining strong teachers. They leave for places where they can be paid a living wage. Teacher turnover negatively impacts our students. We’re coming up with creative ways in Alameda to provide the resources to educate all of our kids. These numbers highlight the reason this initiative must pass. We must do what we can to ensure what’s best for our schools and communities – and that public resources benefit them first.” – Alameda Unified School District Vice President Jennifer Williams

The Schools & Communities First initiative would reclaim $12 billion every year for schools and local communities by closing corporate property tax loopholes, while protecting all residential property and small business property worth $3 million or less. The initiative would also maintain the 1% property tax cap across the board, ensuring businesses in California continue paying some of the lowest property tax rates in the entire country.

This report comes as recent polling has shown the Schools & Communities First initiative to be supported by 58% of likely California voters.


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