Thomas Elias wrote a spirited essay back on July 31, about closing the Prop-13 loophole for commercial property transactions.
He said commercially-owned property is exempt from reassessment if new owners purchase less than a majority share in the asset, and gave two examples: The Mammoth Mountain Ski Resort,in 1997. And more recently, a Gallo family purchase of 1700 acres in Napa County.
Former State Senator Martha Escuita held hearings on this and San Franscico Assessor Phil Ting has written about it on Calitics.
Today, the Ventura County Star published a letter from Bernie Wallen, of the Ventura County Assessor’s Office. It goes into a little more detail about the law.
Wallen described two “reappraisable events”:
1. A corporation or partnership buys a property outright or a direct interest in a property.
2. A corporation buys a controlling interest (51%) in another legal entity that owns a property.
… and he described two NON-appraisable events:
1. Joint property owners form a corporation and sell the property to themselves.
2. A corporation, partnership (or individual investor, I suppose) buys a non-controlling (49.9%) interest in a legal-entity that owns property.
Elias wrote his essay, in layman’s terms, about the 49.9% transactions. Wallen (being a property-appraisal geek) felt compelled to write in and expand upon Elias’ essay. He stated that such transactions are “most infrequent”, but he confirmed the two examples given by Elias and also said that the loophole has been expanded since 1983, and that this has led to a loss in local revenues.
Unfortunately, Mr. Wallen is a well-intentioned bureaucrat, not a political essayist. In attempting to point out some omissions of detail in a friendly academic manner, he appeared, at first, to be refuting Mr. Elias and his thesis.
The Star made matters worse by titling Wallen’s letter, “State’s ‘Big Tax Loophole’ Clarified“. “Clarified” is a pejoritive term. They should have said,”Explained”. I would have said,”Confirmed”.
So, readers who didn’t get past the third paragraph legalese thought that Elias was being rebuked. Two comments on Star’s web site clearly thought so.
Would any other “appraisal geeks” care to read these essays and comment further?