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James Bone, CPA, MBA, CMI

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Jim's Book

A plain-English explanation of how the California property tax system works

 

The California property tax links, news, and information on this site have been provided since July 4, 1996 as a public service of James Bone, CPA

 

   
CASES:
Some Recent Property Tax Cases [9/05]
Olen Commercial Realty Corp v County of Orange (January, 2005):
The taxpayer challenged the assessor's use of the comparable sales approach in valuing improvements to land purchased over 20 years earlier. The assessor's appraiser used all three valuation approaches, with adjustments that the appraiser considered appropriate. The taxpayer argued that only the cost approach was valid.

At the Superior Court trial, the taxpayer tried to augment the record with new evidence to show errors in the assessor's work. The appellate court confirmed the trial court's refusal to admit the evidence. Since the trial lasted less than 8 hours, the trial court was not required to issued findings of fact even though the taxpayer had requested them.

Since both sides failed to comply with requests for information and both sides had sufficient time to prepare, the assessor's failure to provide the taxpayer with comparable sales information prior to the hearing did not result in an unfair proceeding.

Independent Energy Producers Assn., Inc. v. State Bd. of Equalization,
125 Cal. App. 4th 425 (November, 2004): Privately owned electrical generating facilities are 'public utilities' for purposes of property tax assessment. The BOE has the constitutional right under Cal. Const. art. XIII, ¡́ 19 to assess all such properties. Cal. Rev. & Tax. Code ¡́ 721.5, did not make a change in the tax rate for electric generating facilities. Rather, it merely confirmed the Board of Equalization's jurisdiction to assess certain electric generation facilities to the California State Board of Equalization, under the Board's constitutional authority under Cal. Const. art. XIII, ¡́ 19. Privately owned electrical generating property is taxed like all other privately owned property.
Central Cal. Power Agency No. 1 v. County of Sonoma,
122 Cal. App. 4th 1614 (October, 2004): The Board of Equalization determined that the CCPA is a government agency for purposes of property taxation. As a result, the value of its land located outside its boundaries must be based on the 1967 assessed value adjusted for a land value factor. In 1967, Sonoma County only valued the land's grazing rights. Beginning during 1967, leases granting mineral rights were created. Some were subsequently acquired by CCPA. Sonoma County assessed the new mineral rights. The court agreed with CCPA that, since the specific terms of Cal. Const. art, ¡́ 11 do not provide for value changes for undiscovered interests in the land identified after 1967, the proper value was the lien date 1967 value, factored appropriately.
County of Orange v. Bezaire et al (March 2004):
Proposition 13 and Proposition 8, both enacted in 1978, work together to protect property owners from taxes by (1) placing a 1% limit on taxes, (2) establishing a base value for assessment, and (3) limiting the growth of the tax base to 2% per year. Since Proposition 13 segregates the three factors and Proposition 8 was implemented in the growth segment, the Court determined that the intent of the drafters was to provide protection for property owners when declines in value occur. Since the value of a property that had been restored after a disaster was limited to the original base year value adjusted annually for the inflation factor, the Court reasoned that economic restoration after a decline in value due to market conditions would be similarly limited.

Thus, assessors are not limited to the annual 2% when restoring value after any type of decline.

Note: The California statutes require the assessor to permanently change a property's base year value when actual physical changes occur on the property. Since the base is permanently changed, the new base year value increase is limited to 2% after the change. The case link is: County of Orange v. Bezaire The Orange County information link is: 2% Case Updates

Amdahl Corporation v. County of Santa Clara, 116 Cal. App. 4th 606 (March 2004):
Amdahl provided repair and maintenance of sophisticated computer equipment. The service included replacement of parts with parts from Amdahl's supply inventory. Since Amdahl repaired most of the parts and returned them to its supply inventory, the parts were not 'held for sale or use in the ordinary course of business.'

Geneva Towers LP v. City and County of San Francisco (January 2003), 29 Cal. 4th 769, 2003 Cal Lexis 3:
The permissive language of the six-month claim for refund statute of limitations in Revenue & Taxation Code Sec. 5141(b) does not apply as a limitation. The time for filing claims is established under Sec. 5141(s); as a result the catchall provisions of the Code of Civil Procedures Sec. 343 also does not apply.

The time for filing a claim commences when the county Board of Supervisors formally rejects a claim.

Flightsafety International v Los Angeles County (January 2003), 105 Cal. App. 4th 620; 129 Cal Rptr 2d 539:
The assessment appeals board failed to hear a petition within two years for the 1992 year. A prior Court ordered the county to enter the value as shown on the petition on the assessment roll, which the appeals board finally accomplished in 1998. The county only changed the 1992 roll. Flightsafety appealed, and the appellate court directed the county to leave the 1992 value on the roll for all years until 1998.
Geneva Towers LP v. City and County of San Francisco , 29 Cal. 4th 769, 2003 Cal Lexis 3:
The permissive language of the six-month claim for refund statute of limitations in Revenue & Taxation Code Sec. 5141(b) does not apply as a limitation. The time for filing claims is established under Sec. 5141(s); as a result the catchall provisions of the Code of Civil Procedures Sec. 343 also does not apply.

The time for filing a claim commences when the county Board of Supervisors formally rejects a claim.

Exxon Mobile v. Santa Barbara County Bd. of Equalization, 112 Cal. Rptr. 2d 751 (October, 2001):
The assessment appeals board should have treated an onshore oil processing facility and the related offshore oil lease rights as one appraisal unit. The board should have applied the valuation methodology set forth in property tax Rule 468 (Cal Code Regs Title 18, Section 468). The value of the facility was functionally integrated with the associated production capacity and restrictions. Since the issue was the determination of which laws applied to the valuation of the subject property, the trial court was not restricted to the administrative record and properly received additional evidence.
Maples v. Kern County Assessment Appeals Bd., 96 Cal. App. 4th 1007; 2002 Cal. App. LEXIS 2560; 117 Cal. Rptr. 2d 663 (March 7, 2002) and Bontrager v. Siskiyou County Assessment Appeals Bd., 97 Cal. App. 4th 325 (March 4, 2002) both upheld assessors' use of actual interest rates in subsidized housing cases.
Watson Cogeneration Co. v. County of Los Angeles, 98 Cal. App. 4th 1066
(June 5, 2002):
Following other utility cases, the court held that the contract income could be used by the assessor in an income approach when valuing energy production facilities.
Exxon Mobile v. Santa Barbara County Bd. of Equalization, 112 Cal. Rptr. 2d 751 (October, 2001):
The assessment appeals board should have treated an onshore oil processing facility and the related offshore oil lease rights as one appraisal unit. The board should have applied the valuation methodology set forth in property tax Rule 468 (Cal Code Regs Title 18, Section 468). The value of the facility was functionally integrated with the associated production capacity and restrictions. Since the issue was the determination of which laws applied to the valuation of the subject property, the trial court was not restricted to the administrative record and properly received additional evidence.
Howard Jarvis Taxpayers Assn. v. City of La Habra, 25 Cal. 4th 809 (June, 2001):
The intent of Proposition 62 was not merely to preclude enactment of a tax ordinance without voter approval, but to preclude continued imposition or collection of such a tax as well. The specific tax was not approved by the voters as required under Proposition 62. The continued collection of an illegal tax was an ongoing violation, which created a new statute of limitations period with each collection. Therefore, the plaintiffs' action for declaratory judgment and writ of mandate was timely.
Heavenly Valley v. El Dorado County Bd. of Equalization, 84 Cal. App. 4th 1323 (May 2001):
Assessor can't use county de minimus rules or combine years to avoid appeals. Taxpayer can't win by default if appeals board decides not to hear case. (See also the recent revisions to the Property Tax Rules relating to assessment appeals.
Geneva Towers Ltd. Partnership v. City and County of San Francisco, 81 Cal. App. 4th 658 (under Supreme Court review as of September, 2000):
Statutes of limitations on claims limited refunds in some years.
Huson v. County of Ventura, 80 Cal. App. 4th 1131(May, 2000): Statutory amendments that clarify existing law are applicable to all existing causes of action as of the effective date of the law.
Mola Development Corp. v. Orange County Assessment Appeals Board, 80 Cal. App. 4th 309, (April, 2000)
Fair market value of contaminated property is the price at which a willing buyer and a willing seller would consummate an open market sale of property considering the polluted condition of the property.
Helene Curtis, Inc v. Assessment Appeals Bd., 76 Cal. App. 4th 124, (October, 1999)
Applicant could not contest the value of the real property since the application did not specify the real property was also being appealed. (See also the recent revisions to the Property Tax Rules relating to assessment appeals.


 

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