Perris looks to tax its warehouses, other industrial properties

Starting Aug. 26, Perris will host the first of several public meetings regarding a proposed tax on the city’s warehouse-distribution facilities.

Measure C, formally known as the Warehouse General Tax Measure, would place a tax of up to 10 cents per square foot on industrial, warehouse, and manufacturing facilities, all of which create much truck traffic and pollution according to a fact sheet on the city’s website.

Annual increases of the tax would be restricted to three percent, adjusted for inflation. If it passes, the tax will not apply to e-commerce facilities, which generate sales tax. Industrial projects that cover less than 50,000 square feet will also be exempt.

On July 28, the city council voted 4-0 to put Measure C on the Nov. 3 ballot. Councilwoman Marisela Nava was absent.

“The warehouse tax is long overdue,” Councilwomen Elizabeth Vallejo said. “We have a huge number of them, and it’s time we start getting something out of them. We want to make sure we’re getting our money’s worth, especially from the bigger warehouses.”

Measure C would raise a little more than $2.5 million during its first year.  It will need only a majority to pass, and it will not raise taxes on residents, home owners, or small businesses.

If Measure C doesn’t pass, the city will continue to rely on its general fund to repair the damage caused by its industrial properties. Funding for street maintenance and public safety will remain at their current levels, according to the fact sheet.

All of the revenue created by Measure C  will go into the city’s general fund. No other agency, including the state of California or Riverside County, would have any claim to it.

Measure C comes in the aftermath of Measure B, which was approved by Perris voters in June. In December, the city council declared a fiscal emergency so it could address some possible long-term financial problems, including a decline in cannabis tax revenue – the city has several licensed cannabis businesses – and a drop in general fund revenue.

Measure B will raise Perris’ sale tax from 7.75 percent to 8.75 percent. It is expected to go into affect in October, and eventually raise about $18 million a year to help pay for municipal services, including 911 emergencies, paramedic, reducing crime, maintaining parks, and repairing streets.

While the city expects some resistance to Measure C from the logistics industry, it should not be interpreted as an attempt to keep logistics projects from locating in Perris, or slowing their development, said Stephen Hale, Perris spokesman.

“Measure C should be seen as the city needing revenue so it can repair streets and roads, because the truck traffic from our warehouse-distribution facilities has caused a lot of damage,” Hale said. “We need to improve traffic flow and safety, and our residents have already taken on most of that burden. We want our warehouses to do their fair share.

“But Measure C is not intended to keep more warehouses from being built in Perris.”

Perris has approximately 30 million square feet of warehouse-distribution and other industrial facilities operating within its borders, according to the fact sheet.

While those facilities create jobs and contribute to Perris’ economic growth, the non e-commerce projects don’t generate sales tax. Both come with a downside.

Warehouse-distribution facilities create excess traffic from trucks and automobiles, which damages roads, bridges, and other infrastructure. In Perris, as in most cities, “industrial areas require dedicated municipal resources, including police patrols, traffic management, and emergency response,” the fact sheet states.

In 2023, a majority of Perris voters backed Measure A, a warehouse tax similar to Measure C, but a majority wasn’t enough to get it passed. Measure A was a proposed special tax, meaning it would raise money for a specific project rather than for general use.

Such a tax requires a two-thirds majority to pass.

“It was too difficult to get two-thirds of the vote,” Mayor Pro Tem Malcolm Corona said. “The warehouse industry lobbied very heavily against it, and a lot of the information they put out was not correct, so it didn’t pass.”

Both Measure B and Measure C are meant to improve the quality of life in Perris, and there’s reason to believe Measure B has support among Perris voters.

“While we were discussing Measure B, a lot of our residents raised the same question over and over,” Corona said, “They wanted to know why they were being taxed so the streets and roads could be fixed, but the warehouses weren’t. It’s a valid question.”

But taxing industrial facilities is not the best way for Perris to repair the damage caused by those operations, according to Bill Blankenship, legislative affairs director for the Inland Empire chapter of the Commercial Real Development Association, which changed its name from NAIOP July 1.

Prices of goods stored in the city’s warehouses will go up, and that price increase will be passed on to consumers, Blankenship told the council.

“Those buildings will be devalued, businesses will leave, and you will have empty warehouses in Perris,” Blankenship told the council. “Nobody wants that to happen, but that will be the result if Measure C passed.”

Perris already has a temporary ban on approving, building, or expanding any warehouse-distribution facility that will remain in place until at least early December.

“We have a moratorium and a good neighbor policy,” Blankenship said. “Isn’t that enough?