California's Latest Attempt To Fund EV Infrastructure Opposed By CRE And Many Others
Real estate interests are opening their wallets to defeat a measure coming to voters in the Nov. 8 election that will determine whether California levies a new tax to help fund the infrastructure that will support the state’s switch to electric vehicles.
The measure is widely opposed, mainly because many see it as a subsidy for ride-hailing app Lyft, which has poured millions into the measure's passage.
If enacted, Proposition 30 would raise income taxes of people making more than $2M per year by 1.75% through January 2043. The tax could sunset sooner, if air pollution statewide falls significantly below benchmark levels before then.
About 45% of the money raised by the new tax would be used to help people purchase zero-emissions cars, with another 35% going toward installing charging stations at apartment buildings, single-family homes and in public places like shopping centers, according to the state’s Legislative Analyst’s Office. The new tax on high-income taxpayers is expected to generate $3.5B to $5B annually.
Of all the money slated for the development of charging infrastructure, 20% would go toward developing, installing or operating charging stations at multifamily buildings, while 20% would go toward developing charging stations for different kinds of vehicles, from passenger vehicles to electric big rigs. The money would be made available in a number of forms, including grants and loans.
Though electric vehicle charging stations could become a boon to real estate owners, because charging stations can serve as a draw for customers or because they can become sources of revenue in their own right, there are a number of prominent real estate companies and leaders opposing this measure on the November ballot.
“We oppose more taxes, especially taxes that pay to subsidize a corporation, in this case Lyft,” Apartment Association of Greater Los Angeles Executive Director Daniel Yukelson told Bisnow via email.
It’s true that the ride-hailing company helped write the proposition and has donated at least $45M to the campaign, though other supporters include unions and trade groups including Unite HERE and the State Building and Construction Trades Council.
Because of California's impending requirements for electric vehicle usage, Lyft and other ride-hailing apps will have to spend big updating their vehicles in coming years. This tax would help distribute that cost.
Many in CRE are opposing the proposition with their checkbooks. Blackstone partner Worthe Real Estate Group and major landlord Douglas Emmett, both based in Santa Monica, each donated $500K in opposition, state campaign donation records show. Retirement community developer Spieker Partners donated $350K. Affiliates of Prime Group, including its co-Chairmen and co-CEOs Daniel James and John Atwater, donated $285K to the campaign against the proposition.
Detractors, which includes a diverse coalition consisting of Gov. Gavin Newsom, the California Republican Party, the California Teachers Association, the California Business Association and the California Small Business Association, largely oppose the proposition because it is a new tax, according to CalMatters.
The California Air Resources Board has already spent $6.5B on programs like the ones Prop. 30 proposes, aiming to reduce emissions from gas vehicles. The state plans to spend an additional $10B over the next five years, the Los Angeles Times reported.
The federal government has also introduced new subsidies for electric vehicles through the Inflation Reduction Act and new funds for charging stations along the country’s highway network.
Electric vehicles are coming to California in droves within the next two decades regardless of what happens to this ballot measure, due to a plan to end the sale of new gas vehicles in the state by 2035.
