UC, County Assessors Battle Over Taxes on Subsidized Housing for Professors
A state-subsidized housing development intended to lure professors to UCLA has sparked a dispute between the University of California and the county assessor over $200,000 in assessed property taxes that residents of the community say they should not have to pay.
University officials contend that the unexpectedly large tax assessments could damage a project designed to attract top faculty to the school, while Los Angeles County Assessor John J. Lynch says professors are trying to escape paying their share of taxes.
With disputes over similar subsidized housing projects brewing at UC campuses in Orange, Santa Barbara and Santa Cruz counties, officials say the matter will soon end up before the courts, and possibly the Legislature.
About 500 residences statewide, including a 58-house project in Beverly Glen and a project of more than 300 units near the UC Irvine campus, are involved. Under a ruling by the state Board of Equalization, residents are paying the disputed amount until the matter is resolved.
At issue is whether residents of the developments, who own their own homes while the university retains the land beneath them, must pay an assessment on that land.
The Beverly Glen project, known as the Glen, was built in 1986 by the university on state-owned land in an effort to provide professors with affordable housing in the exclusive neighborhoods near the UCLA campus.
Residents paid about half the market rate on similar homes in the area, where the price of a single-family residence can start at $500,000, said Kate Kairoff, a UCLA faculty housing official.
The homeowners pay property taxes on the structures themselves, accounting for about 80% of the tax bill. But under the state Constitution, UC property used for educational purposes is exempt from taxation, and the university contends that this exemption carries over to its lessees.
The taxes in question, which amount to about $1,000 per homeowner at the Glen and as much as $600 per unit at the UC Irvine development called University Hills, could make the difference between junior faculty choosing to move to the expensive neighborhoods in which the campuses are situated, UC officials said.
Said Dave Smith, an assistant professor of sociology at UC Irvine and a resident of University Hills: “Many of us have opportunities to move to other campuses, and the cost of living is dramatically lower in other parts of the country, places like Austin, Tex., Ann Arbor, Mich., and Chapel Hill, N.C.”
Those cities are the sites of the universities of Texas, Michigan and North Carolina, all state institutions.
UC’s statewide director of faculty housing, Steven M. Mathews, said, “We see the primary purpose of these developments is for the institutional goal of attracting or retaining top-name faculty to run our programs.”
But assessors were unconvinced.
“It’s not a public use for public good,” said Howard Whitcomb, a top official in the Orange County assessor’s office. “It’s a public use for private good.”
Of University Hills, he said, “It’s located in one of the finest residential areas in the world: near Newport Beach, in Orange County, Calif.”
Noting that UC had already subsidized the cost of construction, Whitcomb said, “They want their housing less, and plus, they don’t want to pay taxes.”
Lynch, the Los Angeles County assessor, agreed, saying, “I think the whole issue is nonsense.
“A lot of people don’t expect to pay taxes,” he said, noting that professors had reasons other than inexpensive housing for coming to UC campuses.
“People come to California for the benefits of the sunshine and the orange juice,” he said. “We think everybody should pay taxes.”
Sen. Marian Bergeson (R-Newport Beach) is considering introducing legislation that would grant the developments an exemption from the property tax.
“Placing the tax was negating the intent of the law,” Bergeson aide Kevin Sloat said.
Smith, who came to UC Irvine from the University of North Carolina, said that even with the subsidized price of his University Hills condominium, he still pays nearly twice what he did each month for housing in Chapel Hill.
“My mother practically fainted when I told her how much this condominium cost,” he said. “It cost twice as much as her house” in Buffalo, N.Y.