Proposition 13


In City & County of San Francisco v. All Persons Interested in the Matter of Proposition C, Dkt. A158645 (Cal. App., June 30, 2020), the California Court of Appeal upheld Proposition C—a voter initiative that created a new local business tax in San Francisco.  The court upheld the initiative that was enacted by a simple majority of electors.  This ruling answers a question that was been heavily debated since the California Supreme Court’s decision in California Cannabis Coalition v. City of Upland, 3 Cal. 5th 924 (Cal. 2017).  That is, do special taxes proposed by voter initiative require a supermajority of voters to pass?  This decision expressly narrows the supermajority requirement to only those tax measures proposed directly by local governments and will likely trigger more tax initiatives proposed and passed by citizen groups.

The California real estate transfer tax landscape experienced a seismic shift when the Supreme Court of California upheld the imposition of Los Angeles County’s Documentary Transfer Tax (“L.A. Transfer Tax”) on the transfer of a controlling interest in a partnership that indirectly owned Los Angeles real estate through an LLC.  926 North Ardmore Avenue, LLC v. County of Los Angeles, 219 Cal. Rptr. 3d 695 (Cal. June 29, 2017).  Specifically, the Court held “that the tax may be imposed if the document reflects a sale: that is, an actual transfer of legal beneficial ownership made for consideration.”