Manhattan Beach Voters Reject All 3 Real Estate Props

By Dave Fratello | November 6th, 2020

While there were three different real estate-related propositions on the ballot Tuesday, Manhattan Beach voters were having none of any of them.

No give-and-take here. No "maybe" to some new idea.

Instead, about 6 in 10 local voters, or more, said "no" to all three measures.

The measures, Props. 15, 19 and 21, all could have had various impacts on local government funding, real estate values, real estate transaction volumes and residential investment properties.

On two measures, Props. 15 and 21, Manhattan Beach voters joined voters statewide in rejecting the measures.

But on one, Prop. 19, statewide voters passed the measure, and Manhattan Beach will be affected regardless of the local vote.

We'll start with Prop. 19 since it is going to become law.

Proposition 19

This property tax measure provides relief to some and hits others.

It seems almost tailor-made to spur more home sales in areas like Manhattan Beach.

Local voters said "no thanks," by 61% to just 39% support.

In short summary, Prop. 19 does three things:

- Allows homeowners 55 or older to keep their property tax basis when selling a home and moving anywhere in the state, up to 3 times

- Reassesses inherited properties when heirs do not use them as a primary residence, but as investment/rental properties instead

- Allocates money to counties to "backfill" losses when new home purchases bring old, under-market property taxes with them

There are also some marginal provisions in the measure offering the same 55-and-older property tax break to wildfire victims and allocating some funds to preventing and fighting wildfires.

If some of this sounds a little familiar, it's because a comparable measure appeared on the Nov. 2018 ballot as Prop. 5. It was limited to the 55-and-older property tax benefit and was defeated.

This year's successful Prop. 19, approved by 51.4% of voters statewide, resulted from negotiations between the sponsors of Prop. 5 and others who had sought to address the inherited properties "loophole."

Reformers had memorably labeled it the "Lebowski loophole," on account of how "Big Lebowski" actor Jeff Bridges and his siblings had been renting out an inherited property for $16,000/mo. despite minuscule property taxes.

The impact of Prop. 19 locally could be significant, and is probably worth a larger analysis later. In short, if you look around your neighborhood, you likely see a few properties that are owned by people 55 or over who don't feel free to sell and move, or which are held as investment properties by 2nd or 3rd-generation family members. Some may now find it more attractive to sell, while others might eventually decide that they must.

Among the chief sponsors of Prop. 19 was the California Association of Realtors, helping to raise tens of millions of dollars. CAR exec Jeanne Radsick told the LA Times: “It is not about making money for the Realtors, for crying out loud. It’s about tax fairness for people who need help.”

Which is funny, because much of the communication directly to realtors was to support a "yes" vote so we could gin up more home sales.

Proposition 15

The so-called "split roll" property tax measure, Prop. 15, is a policy that has been agitated for over many years.

It was more or less a 42-years-delayed response to the landmark Prop. 13 (1978), which strictly limited property taxes for both homes and commercial properties statewide.

Though Prop. 15 came close statewide, garnering 48.3% support at last count, it suffered a decisive loss within Manhattan Beach, with just 41% support.

Through a complicated years-long phase-in, Prop. 15 would have begun regular property tax reassessments of many commercial and industrial properties. Critics of Prop. 13's implementation have argued that commercial properties have successfully avoided reassessments even upon sale, skewing California's property tax basis heavily toward homeowners. Prop. 15 was designed to rebalance the state's property taxes and increase revenues, targeting much new money to local communities.

Locally, anecdotally, we seemed to hear a lot more from people concerned with the overall impact of increasing taxes on businesses, challenging at time when the COVID-19 pandemic is already stretching businesses thin, and with the potential impact if higher costs were passed on to consumers.

Proposition 21

Rent control was on the ballot again in Prop. 21.

The measure would have allowed cities to impose a broader range of rent-control policies, limiting when rents can be increased and by how much.

Though it was not a statewide policy, but an allowance for local policies, it was firmly rejected across the board.

Statewide, Prop. 21 got only 40.3% support, making it the third-least-popular measure on the ballot. The two measures performing worse were a law-enforcement-sponsored criminal justice measure (Prop. 20) and a retread measure pertaining to regulation of kidney dialysis clinics (Prop. 23).

In Manhattan Beach, rent control did even worse than statewide, getting just 30% of the vote.

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Nerdy note: The local vote data are taken from LA County's count as of Weds. afternoon at 3pm. The county will continue to update figures through Dec. 11, and some percentages could change. In past years, later counts have tended to skew more "liberal" overall, but this year it's anyone's guess what sort of shift may come. Statewide data referenced here are current as of Friday morning.

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