Irving Co. May Face 2nd Reassessment of Property

A state Board of Equalization ruling may prompt the second reassessment in two years of property owned by Irvine Co., Orange County’s largest landholder.

The board ruled last week that Irvine Co. changed hands in November, 1983--when Irvine Co. and Newco I Corp. of Michigan merged--even though developer Donald Bren was majority owner of both corporations. That could translate into a substantial reappraisal of Irvine Co.’s property because, under Proposition 13, the normal limits on new assessments are lifted when ownership of property changes hands.

The state ruling follows an existing dispute between Irving Co. and Orange County Assessor Brad Jacobs over a reappraisal stemming from an April, 1983, deal in which Bren acquired a controlling interest in the company. On the basis of that transaction, Jacobs reassessed Irving Co.’s nearly 68,000 acres in the county, boosting the company’s tax bill from $19 million last year to $51 million this year.

Irvine Co. has disputed the county’s previous change of ownership finding and is appealing its tax bill in a case before the county’s Assessment Appeals Board.

Gary Hunt, an Irvine Co. vice president, downplayed the importance of the new state ruling, saying that real estate values were falling in Orange County over the seven months between the two 1983 transactions.

Jacobs said that his staff is still evaluating the new ruling but acknowledged that it could trigger another reappraisal. He said the latest ruling would be considered separate from the previous tax dispute. “These two transactions have nothing to do with each other,” he said.

Irvine Co. has challenged the county’s reappraisal of its property on two grounds. The company maintains that Bren’s purchase of an additional 50% of the company’s stock, boosting his stake to 84%, did not amount to a change of ownership. It also argues that, once the county determined that the transaction was an ownership change, it used an improper basis for determining its property’s value. Irvine Co. said the reappraisal should have been based on the $1-billion price that Bren’s deal established for the company.

Jacobs, however, has contended that a sales price is but one indicator of land value and is not always the most reliable one when much of the land is undeveloped.