Calitics - Recent Comments

This is not Steinberg's call

mbayrob — Fri, 03 Jul 2009 00:27:24 GMT

The governor is not negotiating in good faith, and it is not Steinberg's right or brief to sell out the people of the state.

The state Democrats need to do a news conference saying that they are doing what they can, but they cannot ~~negotiate with terrorists~~ do a deal without a good-faith effort by the governor.

And then, they should adjourn both houses and go home.

Cliff Diving doesn't hurt until....

A.Citizen — Thu, 02 Jul 2009 22:54:33 GMT

...like Will E. Coyote you hit the canyon floor.

It seems that the only thing that will wake up the sheeple in this state is for that to happen. Hard to see what 'game' Ahnuld the Stupid is playing. I doubt he even knows.

Until we get the 'Boom' and the dust clears from the impact I really cant' generate the energy to care.

Close the schools...

Throw Granny in the streets...

Let's see some real blood on the windshield as ATS drives us into the woods.

Maybe, just maybe folks will be willing to get off their asses then.

Meanwhile pass the popcorn. 'Government' Ahnuld style is just like the movies at the moment....

....a spectator sport.

General understanding & background for non-lawyers:

RLMiller — Thu, 02 Jul 2009 22:17:43 GMT

Prop 13 is only triggered if there is a change of ownership above a minimum threshold (33% IIRC) over X period of time (1 year IIRC). So most commercial property sales in CA are structured as follows:

--Reality: Corp A sells Building to Corp B on 7/1/09 for $3 million. Corp A has owned Building since 1978, when it was assessed at $100K, and has faithfully paid $1,000/year (plus 1%) since then. The sale should cause Building's property tax to be reassessed at $30,000, but instead Corps A & B engage in Legal Fiction.

--Legal Fiction: Corp A transfers Building to a Holding Corp with 3 shares of stock; an exception in Prop 13 somewhere permits intracorporate transfers, so no reassessment is triggered. On 7/1/09, 1 share of stock is transfered to Corp B; on 7/1/10, 1 more share; on 7/1/11 the final share is transferred to B. (I assume that there are escrows and safeguards built in somewhere to ensure that A doesn't play games with transfers.) Thus, the property is never "transferred," never reassessed, and Corp B goes on paying $1,000/year instead of $30,000/year.

Full disclosure: I'm a lawyer with some limited real estate practice but I don't do commercial transactional work. I have heard that failing to structure the transfer as above constitutes legal malpractice.

Yes of course

cenobite — Thu, 02 Jul 2009 22:14:03 GMT

However, I have experience in counter-griefing, and I am absolutely confident I can design a system that is very hard to take advantage of.

And then you do what the legislature did.

auron renouille — Thu, 02 Jul 2009 21:23:04 GMT

Leave the rent static and instead impose a "facilities fee." And that's just what I thought of off the top of my head, there's probably more ways to circumvent your idea.

Here's a proposal

cenobite — Thu, 02 Jul 2009 20:10:19 GMT

Commercial property gets reassessed every time the rent is increased.

They are making more money from the property, it is therefore worth more.

Thanks for writing this, Brian

auron renouille — Thu, 02 Jul 2009 18:57:21 GMT

When I took the Cal Bar, I thanked every deity that I could conceptualize that our real property essay question was a landlord/tenant warranty and breach issue - issues of land sales and transfers are often inscrutable even to lawyers.

I'm still scratching my head trying to figure out how to reassessment for buildings owned by one-asset "holding companies" where there is no new recordation

So how do you handle Prop 13 for businesses? I hate how much Prop 13 has hurt the state as a whole, but there are a small category of people who are still entitled to protection from California's roller coaster real estate market, namely people who have owned a family home in an area that was once modest but is now extremely wealthy, that sort of thing. For instance, if you were to buy a condo in LA's Koreatown today and 20 years from now it became an extremely wealthy neighborhood (entirely possible, maybe even inevitable given its desirable location and diversity) How do you protect those people without allowing for all this abuse?

I guess I would flip the presumption around, given that "owner-occupied" and "residence" are easy to define and don't require you to define a "transfer." Instead of only triggering a reassessment upon a new land transfer recordation, you'd have to instead create a presumption that a piece of property should be reassessed yearly unless the owner of the property can provide proof that it's an owner-occupied residence. In order to prevent excess paperwork, is that something that the Franchise Tax Board could handle? I don't have an adequate answer to these questions.