Propositions 15 and 21: Raised property tax, rent control headed toward loss at the polls

SAN FRANCISCO (KGO) -- A ballot measure raising property taxes on commercial buildings appears to be losing by a slim margin, while another measure to expand rent control was crushed at the polls -- for the second time in two years.

Prop 15 would have raised taxes on commercial properties to fund schools and local government. The rent control measure was meant to prevent homelessness... though voters say they care about all those issues -- it seems like it wasn't enough.

Prop 15 supporters hailed the measure as big business paying its fair share. It won endorsements from big guns -- Governor Gavin Newsom, Senator Bernie Sanders, Vice President Joe Biden.

It would require most commercial buildings worth more than $3 million to pay property taxes based on current market value, not the original purchase price.

It would raise up to $11.5 billion a year for local government -- and under-funded schools.

"Right now we don't have counselors, right now we don't have nurses, there're still children who don't have computers," said Toby Boyd of the California Teachers' Association.

But small businesses, already struggling in the pandemic, say the measure could push them over the edge -- because their landlords can pass the tax down to them.

"Small businesses like restaurants and retail and bookstores and storage places, but especially restaurants and bars that have these strict leases. Everyone says, 'Oh the landlords will renegotiate.' I'm like no, they won't," said restaurant owner and Executive Director for the Golden Gate Restaurant Association Laurie Thomas.

She says one of her leases requires she pay half her landlord's property tax. "I think any taxes right now are going to have horrible unintended consequences. We need to fix the school districts, but we need to be super-conscious that this isn't going to kill more businesses."

Prop 15 was losing by just over two percentage points -- while another consumer measure to expand rent controls went down decisively.

"I think the housing issue in California is a very serious issue," says labor organizer Dolores Huerta, a key supporter.

"And when we see all the thousands of people on the streets unsheltered and unhoused, we know we have a crisis, and every attempt to address the housing issue is met with opposition... We have to start thinking about humanity," she said.

The measure lost by a wide margin, just as a similar measure did two years ago.

Prop 21 would not have set rent limits by itself.

Instead, it would have given cities and counties the power to set limits on buildings 15 years old or more. It also would have capped rent hikes at 15 percent over three years for new tenants moving into vacant units.

Opponents said it would worsen the housing crisis.

"Everyone agrees that housing in California is way too expensive, but the last thing we need to do is make it even worse and make less housing available," said Prop 21 opponent Steve Maviglio.

Maviglio says more regulation will discourage housing construction. And landlords won't stay in the rental business.

"We know that when these laws go into effect, people take their homes off the market or they turn their apartments into condos or Airbnbs because they don't want to deal with regulations, and for renters that means there's less affordable housing out there and that's worse for everybody," he said.

Even though the rent measure failed, the state did pass a cap on rent increases at 5 percent earlier this year.

Take a look at more stories and videos by Michael Finney and 7 On Your Side.