The Alhambra Chamber of Commerce voted to oppose  AB-1771 because it would result in further forced property value escalation, as owners would be forced to pass the tax cost onto the consumer.

In a flawed attempt to prevent developers' speculation and stop the astronomic property values rise in California, Assembly Member Ward (D-San Diego) introduced AB-1771, which would impose a sliding scale net capital gain tax of up to 25% from the sale or exchange of a property sold within 7 years from the date of acquisition.

The bill would reduce those taxes depending on how many years have passed since the initial purchase, as follows:

• Reduction of 20% if the sale or exchange of the qualified asset occurred 3.01 to 4 years.

• Reduction of 40% if the sale or exchange of the qualified asset occurred 4.01 to 5 years.

• Reduction of 60% if the sale or exchange of the qualified asset occurred 5.01 to 6 years.

• Reduction of 80% if the sale or exchange of the qualified asset occurred 6.01 to 7 years.

• No additional tax if the sale or exchange of the qualified asset occurred more than seven years after the initial purchase.

The bill's additional tax revenues would be deposited in a proposed Speculation Recapture Community Reinvestment Fund. The tax dollars in this fund would be distributed as follows:

• At least 30% shall be allocated to counties to be used to create affordable housing in the county.

• 20% shall be allocated to school districts to be used for general purposes.

• 40% shall be allocated to cities, or counties if the qualified asset is located in an unincorporated area, to be used for general infrastructure, transit or active transportation projects, or community facilities.

• Up to 10% shall be allocated to the Franchise Tax Board to administer this article.

The Alhambra Chamber joined a coalition across the state to oppose this bill, as one of the other unintended consequences of the bill is that fewer people would be able to afford homes and small developers would be driven out of business. While the Chamber does support creation of more affordable and market-rate housing, this bill does not help the State achieve that goal.