In general, Prop. 15 requires commercial properties to be re-assessed to market value, but excludes residential properties from re-assessment.  Mixed-use properties are unique in that they are used for both commercial and residential purposes.

Question: Will mixed-use properties be re-assessed to market value if Prop. 15 passes?

Short Answer: There are three key rules for mixed-use properties:

1. The portion of a mixed-use property which is used for residential purposes will not be re-assessed to market value.
2. The commercial portion is subject to re-assessment.
3. However, if 75% or more of the property is used for residential purposes, the California legislature is authorized to exclude the commercial portion from re-assessment.

The Residential Portion of a Mixed-Use Property is Exempt from Re-Assessment: Under Prop. 15, the portion of a mixed-use property which is used for residential purposes will not be re-assessed to market value.  In the example of an apartment building with ground-level retail, the portion with apartment units will not be re-assessed to market value.

The Commercial Portion of a Mixed-Use Property can be Re-Assessed: In general, the commercial portion of a mixed-use property will be re-assessed to market value.  However, if the requirements of the 75% exemption described below are satisfied, then the commercial portion would not be re-assessed to market value.

Possible Exemption Where 75% or More of Mixed-Use Building is Residential: The commercial/retail portion of a mixed-use building is exempt from Prop. 15 market value re-assessment only if the following two requirements are satisfied:

1. Seventy-Five percent (75%) or more of the property, by square footage or value, is residential.
2. The California legislature passes a law excluding such properties from Prop. 15 market value re-assessment.