- Sutherland Asbill & Brennan LLP
- USA
- May 15 2013
The Court of Appeal ruled that the County of Los Angeles illegally
assessed the possessory interest of the lessee of a building owned by
the California State Teachers’ Retirement System. The possessory
interest was valued pursuant to a special statute that only applied to
property owned by a state public retirement system, which allowed the
inclusion of the value of the tax-exempt reversion in the value of the
possessory interest. In reversing the trial court’s decision, the Court
of Appeal stated that the Los Angeles County Assessor should have
declined the value of the possessory interest with each successive
assessment to recognize the declining remaining term of the possessory
interest. This is a significant and beneficial point to taxpayers
owning possessory interests in California, because a declining term
causes the value of the possessory interest to decrease as a function of
time. Further, the Court of Appeal cited language in the California
State Board of Equalization Handbook (AH 510) to support its decision.
This decision is the second in the last four months (the other being Sky River LLC v. Kern County,
214 Cal.App. 4th 720 (2013)) to give judicial credence to the
Assessors’ Handbooks. When there is helpful language in Assessors’
Handbooks to support taxpayer positions, Assessors can be inclined to
ignore the guidance contained in these Handbooks. California State Teachers’ Retirement System v. County of Los Angeles, B225245, Court of Appeal, Second Appellate District (May 7, 2013).
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