Irvine Co. May Benefit From New Tax Rule
A new rule that could benefit the Irvine Co. in its fight to cut its property taxes by $30 million a year has received final state approval despite opposition from county assessors.
California’s Office of Administrative Law gave final approval Tuesday to a rule, adopted by the state Board of Equalization, that directs county assessors to presume that the market value of a property is equivalent to its purchase price as long as there was no collusion between buyer and seller.
Previously, market value was only one of several factors that assessors could take into account.
The rule could help the Irvine Co., which is challenging Orange County Assessor Brad Jacobs’ decision last August to increase the taxable value of the development company’s 68,000-acre holding to $3.2 billion. The company is arguing that the property should be assessed at $1.1 billion, based on the price that its chairman, Donald Bren, paid to acquire majority ownership of the company in April, 1983.
Depending on the outcome of the debate before an appeals board, the Irvine Co.'s annual property tax bill may remain at $49 million or drop to $19 million.
A spokeswoman for the Office of Administrative Law said the agency, which looks at the procedural and legal ramifications of proposed legislation, changed its position after the Board of Equalization submitted additional supporting documentation.
If the rule does apply to the Irvine Co., it will shift the burden of proving whether the Irvine Co.'s landholdings have been properly assessed from the company to the county assessor’s office. The attorney for the Irvine Co., Bob Curry, said the appeal probably will be heard next spring.
Assessor Jacobs contends that the law will not change the way in which the Irvine Co. property was assessed because it was adopted after the county placed the higher assessment on the tax rolls.
But James Delaney, chief counsel for the state Board of Equalization, said the new guideline will apply in any procedural hearing that, like the Irvine Co.'s assessment appeal, is conducted after the rule has gone into effect--regardless of when the original property assessment was made.
Curry said he hopes the new rule will enhance the Irvine Co.'s position and predicted that the question of whether the rule will apply in the company’s appeal ultimately “will be decided by some court somewhere.”
The California Assessors Assn., the chief opponent of the new guideline, was surprised by the Office of Administrative Law decision, according to Ray Flynn, Humboldt County assessor and president of the association.
Flynn said it would have been “simple courtesy” for the Board of Equalization to inform the association that it was submitting additional materials to the Office of Administrative Law in order to give the assessors a chance to submit a rebuttal. He said the association now must decide whether to take legal action to have the rule rescinded.