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Get ready for a big fight over California’s property taxes in 2020

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A big battle over property taxes in California is shaping up for the 2020 ballot.

Supporters of a bid to increase taxes on commercial land announced Tuesday they’ve collected more than 860,000 signatures to force a vote on the issue in two years.

“This is a defining moment for California,” Fred Blackwell, CEO of the San Francisco Foundation, said in a statement. “Closing the commercial property tax loopholes is important to our state.”

Backers, including the California Federation of Teachers, the League of Women Voters and community organization California Calls held news conferences Tuesday in Los Angeles, Berkeley, Fresno, San Diego and San Bernardino to demonstrate support across the state for the idea. Of the signatures turned in to the Secretary of State’s office, 585,407 must be deemed valid for the measure to qualify for the November 2020 election.

The initiative would make dramatic changes to the tax system established four decades ago by Proposition 13, which capped how much property tax bills could increase every year. The proposed measure would boost property tax revenues from commercial and industrial properties by assessing them at their current market value. Property tax protections would remain unchanged for residential properties.

The changes could net $6 billion to $10 billion annually in new property tax revenue statewide, according to an estimate from the state’s nonpartisan Legislative Analyst’s Office. The analyst’s office also warned that the measure could have significant downsides for California’s economy by causing businesses to leave or opt against relocating to the state.

Business groups are girding for the fight over the tax hike, known as “split-roll” because it assesses residential properties different from commercial and industrial properties.

“California already has the worst climate for business and job creation in the country,” Rex Hime, president of the California Business Properties Assn., said in a statement. “A split-roll property tax will just increase pressure on many businesses that are already finding it hard to make ends meet.”

 

 

 

Read more on LA Times

 

 

 

As San Jose boosts job growth, the challenge will be where to house new employees

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With the potential for Google to add around 15,000 employees at its planned 8M SF Google Transit Village, San Jose is presented with an ongoing challenge: How can a city grow jobs in a largely undersupplied housing market?

In the next 10 years, San Jose will benefit from more development and have a vastly different skyline, but also increase its population.

“We’re just going to have more humans,” Swenson Senior Director Josh Burroughs said during Bisnow’s Silicon Valley State of the Market event Thursday. “I think that’s the biggest change.”

He said in the next 10 years, downtown and the immediate area around Diridon and Midtown from Valley Fair and Santana Row to Downtown will be more crowded with people.

The current pipeline has 6,000 units nearing or waiting for entitlement with 4,000 units under construction.

“There is a demand for those 10,000 units today,” Burroughs said. “If Google builds and adds 15,000 employees where are they going to live? We have a constant need for housing.”

In addition to the impact Google would have on the multifamily market, panelists discussed rising interest in the North San Jose and Milpitas office and mixed-use market and the benefits of investing in those markets. The Bisnow event was held at DivcoWest’s Century Plaza office complex in Foster City.

Swenson is currently working on a 260-unit off-campus student housing project near San Jose State University. Burroughs said what makes the project naturally affordable is that students pay by the bedroom instead of by the unit.

One of the biggest challenges developers and cities face is ongoing opposition to much-needed housing.

 

Read more on Bisnow Silicon Valley

 

 

 

Big downtown San Jose office, retail Museum Place complex pushes ahead

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A new vision has emerged for a crucial downtown San Jose development known as Museum Place that would add offices and retail next to The Tech Museum of Innovation, according to city documents being reviewed this week.

Some details about the new Museum Place approach were contained in San Jose city staff reports regarding an agreement to bring aboard a group led by realty entrepreneur Gary Dillabough. The Dillabough group will provide fresh capital and investments to get the project moving forward. This news organization had reported previously about Dillabough’s planned involvement in the Museum Place development on Park Avenue.

“The developer has a formidable vision for San Jose’s future,” according to a memo prepared by Kim Walesh, San Jose’s economic development director. “Mr. Dillabough has indicated a strong desire to make the Museum Place project a standout location that the City of San Jose can look to with pride.”

 

 

Read more on The Mercury News

 

 

Property Taxes Surge on Higher Values

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Rising property taxes can be a problem for both tenants and landlords.

Corporations that have been focused on the potential windfall that tax reform will bring are getting a reality check when they look at their property tax bills. Commercial and multifamily properties across the country are seeing a spike in property taxes as assessors continue to reset values to higher levels.

It has taken property tax appraisals time to catch up from the bounce back in values that has occurred after the recession. Some jurisdictions assess commercial property values every year, while others reassess values on a two or three-year cycle. In some cases, such as with the Carolinas, assessments occur every seven years, notes Dorothy Radicevich, a principal in the state and local tax practice and national property tax leader with accounting firm BDO. Most markets are now up to speed on property values, which have now exceeded pre-recession levels in many areas of the country.

“There have been major re-evaluations in commercial properties in all of metro Atlanta for the past two years and especially this year,” says John Hunsucker, owner of Property Tax Consulting LLC in Atlanta. Some of the lower valued properties don’t get as much attention. But this year most of the counties in metro Atlanta reassessed values on higher-end properties that resulted in tremendous increases, he says.

Although some states and jurisdictions do have a cap on how much taxes can be raised annually, such as 2.0 percent to 3.0 percent, Georgia has no such cap. Some taxing authorities in metro Atlanta have gotten very aggressive with tax assessments that have jumped by more than 300 percent, notes Hunsucker. In Fulton County, for example, some of the 2018 assessed values on high-end apartments are higher than what properties could trade for in the current market, he says.

 

 

Read more on National Real Estate Investor

 

 

Cupertino to get serious tonight about new business tax that could generate millions from Apple

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Cupertino’s City Council tonight will consider what kind of restructured business tax it might place on November’s ballot for Apple Inc.’s headquarters city.

The move comes as nearby Mountain View looks like it’s headed toward referendum to place a “head tax” on Alphabet’s Google and other large employers in its boundaries. Public polling in Cupertino has indicated heavy support for something similar there. Such a tax would mostly hit Apple, by far Cupertino’s largest employer.

Just a week ago, the City Council in Seattle — headquarters to Amazon.com — repealed a controversial head tax that it had put on the books just a few weeks earlier, after opposition from Amazon and others in the business community.

No such public threats have been made in Mountain View, but the Cupertino Chamber of Commerce posted a no jobs tax message on Twitter on Friday and sent out a press release quoting its president, Andrew Walters, calling for no such measure in November’s election.

The impetus for this budding movement in prosperous, tech-dominated cities is the belief that the traffic congestion and housing shortages in those places is due to tech growth, Cupertino Vice Mayor Rod Sinks recently told the Business Journal.

But although no one from Cupertino’s chamber would comment on the record, the organization’s opposition stems from the fact that the tax revenue the city hopes to gain is not restricted to specific projects that would address transportation issues that the chamber sees as most critical, the Business Journal was told.

Tonight’s meeting will be to decide what kind of tax — head tax (based on the number of a company’s employees), payroll tax or an expansion of Cupertino’s existing square-footage tax — might be proposed.

 

 

Read more on Silicon Valley Business Journal

 

 

Why clothing stores are still opening in San Francisco

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A majority of shuttered mall stores over the past few years have been clothing shops, but new Bay Area leases show a sector not in free fall quite yet.

Hip women’s clothier ModCloth, streetwear brand Supreme, athleisure label outdoor Voice and luxury basics purveyor Everlane are among a new class of specialized labels defying recent trends.

Shifting consumer demands, years of oversupply and the rise of ecommerce combined to trigger more than 7,050 tore closings last year, according to Coresight Research. Already, the New York-based retail analyst has tracked nearly 3,900 store closings compared to about 1,800 openings this year.

Yet, while most clothing brands are racing to weed out underperforming stores, others are ramping up.

 

Read more on San Francisco Business Times

 

 

Millennial migration favors San Jose despite cost of living, says census

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The Bay Area is getting more mixed messages on the seemingly perennial question of if and how quickly residents are fleeing the region and the state.

The finance company Smart Asset released a report Friday claiming that San Jose is one of the most popular destinations for millennials on the move despite its high cost of living.

Smart Asset economist Derek Miller sorted through U.S. Census data to figure out which U.S. cities got the greatest inflow—i.e., the margin of new residents relocating to a city over the number of those moving away—with the ever-topical millennial demographic, here defined as anyone between the ages of 20 and 34 in 2016.

Suffice to say, San Francisco did not acquit itself well with the trend, despite previous census analyses revealing that the city’s median age is gradually getting younger with each passing year. Instead, millennial movers reportedly favored San Jose, which came in seventh place on Miller’s list, the only California city to break the top ten.

 

 

Read more on Curbed SF

 

 

Modular units make their debut at Oakland housing project

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Modular units are being installed at Coliseum Connections in Oakland.

The $53M project, developed by a JV of UrbanCore and Oakland Economic Development Corp., will create 110 mixed-income units on a 1.3-acre Bay Area Rapid Transit-owned parking lot ground-leased to the JV.

The modular units were built by Guerdon Enterprises out of Boise, Idaho. Completion of the modular unit placement is expected on June 29. The project is expected to be completed in January when occupancy also is expected to begin.

Coliseum Connections is one of a handful of modular projects in the works or being planned in Oakland. Panoramic Interests plans to build over 1,000 units in West Oakland next to BART, and RAD Urban is planning two high-rises from steel modular units.

The project at Snell Street and 71st Avenue will have 55 market-rate units with rents ranging from $1,900 to $2,400 for households earning 80% to 120% of the area median income; the other 55 units will be affordable with rents from $1,100 to $1,600 for households earning 50% to 60% of the area median income.

 

Read more on Bisnow

 

 

China Trade War Threat May Have Died Down, But CRE Is Still On the Front Lines

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Chinese presence in U.S. commercial real estate seems to be waning, trade war or no trade war.

The fate of the off-again, on-again specter of an impending U.S.-China trade war may be uncertain, but regardless of what happens with tariffs and exports, the U.S. commercial real estate industry continues to feel the effect of both China’s cold shoulder and the stricter U.S. regulatory environment surrounding foreign investment.

Chinese companies and financial institutions were active in U.S. commercial real estate in recent years, both on the equity side and the debt side, but their presence seems to be waning, trade war or no trade war.

In New York City alone, Bank of China was involved with originating about $5 billion in loans for prominent commercial properties in 2013 and 2014. Bank of China has been party to loans of more than half a billion dollars each for trophy properties in the Big Apple, including the Sony Building at 550 Madison Ave. (originated in 2013), the One Astor Plaza headquarters of Viacom and its MTV studio (2012) and the 63 Madison Ave. home of tenants such as IBM (2015).

Other big Chinese players in the U.S. real estate market over the past few years have included the Industrial and Commercial Bank of China, which financed New York properties including the Bush Tower at 130 W. 42nd St. (2015), and Anbang Insurance Group, one of China’s largest insurance groups.

 

 

Read more on National Real Estate Investor

 

 

San Jose becomes a ‘city of churn’ as high-earners move in and residents look to lower-cost markets

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San Jose is simultaneously one of the nation’s most sought cities by job seekers and home to the most job holders who want to leave, a dichotomy that could have profound impacts on Silicon Valley’s business future and social fabric.

That dichotomy stems from the way technology has become the foundation of the U.S. economy and Silicon Valley the capital of that industry, says the author of a recently published study by the online jobs and recruiting site Glassdoor. And it could have profound impacts on the Valley’s business future and social fabric.

“San Jose is a city of churn,” said Andrew Chamberlain, Glassdoor’s chief economist. “It’s the most dynamic of any city of the big metros we looked at” in the company’s 25-page report entitled “Metro Movers: Where are Americans moving for jobs and is it worth it?”

San Jose ranks third on the list of places — after San Francisco and New York — where U.S. job seekers in Glassdoor’s database of 668,000 job applications are applying, the report says.

But San Jose ranks behind only Providence, Rhode Island — which turns out talented college graduates much faster than it creates jobs — as home to the largest percentage (47.6 percent) of applicants seeking work elsewhere.

 

 

Read more from Silicon Valley Business Journal