Tuesday, June 28, 2005

Supreme Court Decision neuters Proposition 13

The "People's Initiative to Limit Property Taxation” more commonly called Prop 13, has been nearly been completely overturned due to last weeks U.S. Supreme Court Decision to reinterpret a portion of the 5th amendment for the benefit of government "financial interests". Because of this decision, all a government would have to do is use its eminent domain power to evict a homeowner and offer that property to a private interest who will pay a higher tax assessment.

Prop 13 limits the property tax assessment to 1% of its purchase price, forever, until the property is resold “voluntarily”. Anti-Prop 13 groups want to chang the law so that properties can be assessed at a higher amount in order to bring more tax revenues to the governemtn treasury. This decision empowers the governemnt to force the homeowner to sell the property (when the government wants the property sold) and entertain offers from new potenetial private owners who will purchase the property and pay a higher assessment tax to the government treasury.

Since the governemnt only has to declare that the public use is the increased tax revenue and not the actual public usage of the property bieng taken, they can legally sell that same house to a new buyer nd enjoy the increased flow of tax receipts from the new homeowners.

Anti-Prop 13 groups are going to realize this and suddenly there will be plans for mass population shifts of the less affluent around the state. Governments can plan for new residents in those old and stable houses that don’t flood or suffer earthquake damage. Governments can advertise their proposals to potenetal residenst who will pay the higher tax assessment in place of the increased commuter costs they have been paying since they moved to the suburbs.

Unfortunately the carnage does not end with the aformentioned. This decision has made government a Real Estate Broker and General Contractor. Once again since the public use is only increased tax revenues and the government is not restricted from selling that same house to a new potential homeowner, governents could also create their own listings and do their own remodeling. Before any reader dismisses this paragraph as pure speculation, first examine the level of involvement governments already have in the Real Estate Industry – Section 8 and HUD Housing.

Prop 13 Advocates had better be busy devising strategies to respond to this seismic shift in public policy!

Mali D. Currington

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