Metropolitan News-Enterprise

 

Thursday, May 25, 2023

 

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Appeal From Tax Bill Can Result in Boosted Amount—C.A.

Feuer Says Higher Assessment As a Consequence of Taxpayer Contesting Valuation May Seem Unfair, but Taxing Authorities Are Obliged Be Accurate and Must Make Adjustments, Up or Down, When Issue Arises

 

By a MetNews Staff Writer

 

The Court of Appeal for this district has issued an opinion lending credence to the adage, “Be careful what you wish for,” holding that taxpayers that sought a reexamination by the Los Angeles County Assessor’s Office of its valuation of their shopping center at about $94 million and got a new valuation—which came to approximately $113 million—are stuck with the new figure where they cannot show that it’s faulty.

Writing for Div. Seven, Justice Gail Ruderman Feuer said in the first paragraph of her opinion, filed Tuesday:

“This appeal provides a cautionary tale of how a property owner’s challenge to a county assessor’s valuation of the owner’s property can result in the assessor recommending—and an appeals board adopting after a hearing—a valuation higher than the initial valuation. Unfair as this may seem, the assessor and the appeals board have a duty to the property owner and the taxpayers to correctly assess the value of property. As long as the assessor provides notice to the property owner of the assessor’s intent to present evidence of a higher valuation at the appeals board hearing, the statutory scheme vests the appeals board with the authority (and the obligation) to determine the full value of the property, after considering evidence submitted by the assessor and the property owner, even if that value is higher than the initial valuation.”

Judgment of Dismissal

The opinion affirms a July 23, 2021 judgment of dismissal of the action filed by owners of the Villa Marina Center in Marina del Rey. The judgment was signed by Los Angeles Superior Court Judge Kristin S. Escalante; it was based on an order by then-Los Angeles Superior Court Judge Patricia D. Nieto on June 18, 2021, sustaining demurrers without leave to amend.

At issue was the challenge by RAR2 Villa Marina Center CA SPE, Inc., RAR2-Villa Marina Center CA, LLC, and Villa Marina Company, LLC to the 2011 valuation of property, purchased by them in 2006 for $100 million, but which, they maintained, had plummeted to a worth of $48 million. Once they appealed, and the Assessor’s Office gave notice that it now reckoned the value to be higher than it had previously determined, the owners sought to withdraw their appeal, but that required concurrence by the assessor, which was not forthcoming.

The appeals board in 2019 upheld the higher valuation of $112,545,441 and a June 5, 2020 lawsuit ensued.

Door Is Opened

Feuer commented:

“We recognize that if the Villa entities had not challenged the initial valuation, they would not have suffered an increase in the valuation for that year. But once they filed an appeal of the initial valuation, the assessment appeals process opened the door to a determination by the Board of the correct value—higher or lower. The Villa entities have not shown error in the Board’s conclusion the correct value was significantly higher than the initial valuation.”

The notification by the Asssessor’s Office that it had determined a higher valuation to be appropropriate—denominated in Feuer’s opinion as a “raise letter”—did not invoke the one-year limitation period in Revenue and Taxation Code §4831(c) for recalculating assessments downward, in light of new legislation, Feuer said, because no downward calculation was in issue.

Statute Doesn’t Apply

She wrote:

“[I]n the context of an assessment appeal, that the assessor recommends a higher valuation than the roll value is not properly characterized as a proposal by the assessor to correct the roll value to reflect a decline in the property’s value, even if the initial assessment reflected a decline in value, and therefore, the one-year limitations period under section 4731, subdivision (c), does not apply.”

The case is RAR2 Villa Marina Center CA SPE, Inc. v. County of Los Angeles, 2023 S.O.S. 1697.

 Cris K. O’Neall of the law firm of Greenberg Traurig, Ruben Sislyan represented the taxpayers and Los Angeles Deputy County Counsel Drew M. Taylor argued for the county.

 

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