LA Times Prop 13 Story Misses Important Piece

Joel Fox
Editor and Co-Publisher of Fox and Hounds Daily

The Los Angeles Times’ weekend story implicating Proposition 13 as an accomplice in computer billionaire Michael Dell’s effort to avoid a property tax increase on a Santa Monica hotel he purchased curiously doesn’t carry any comments about the situation from Prop 13 supporters. I write ‘curiously,’ because the Times reporter interviewed a number of us on the situation – none of whom defended Dell and his scheme to avoid taxes by writing the deal so no more than 50% of the property ownership changed hands. 

While it may not have fit nicely into the Times’ narrative, defenders of Prop 13 agree that properties should be reassessed any time there is a true change of ownership, which appears to be the case here. Supporters of Prop 13 have always said assessors must enforce the law, which the L.A. County Assessor’s office appears to be doing in the Dell case. The courts still may decide this is a violation, as the assessor claims.

I, for one, told the reporter about the time that I accompanied Howard Jarvis, co-author of Prop 13, to a Los Angeles County Board of Supervisors hearing, in which Jarvis testified that he was opposed to any gimmicks to avoid property tax reassessment when an obvious change of ownership occurred.

I also pointed out that the Los Angeles County’s assessor’s office pursued a similar situation in the late 1980s when a Japanese firm took control of the Arco Plaza in downtown L.A. The County prevailed in court as the judge argued that common sense revealed that a change in ownership had occurred and the property was reassessed. As the judge noted in that case: “…the substance rather than the form of the transaction is controlling.”

In the current case, the County is appealing a lower court ruling in favor of Dell.

Despite my comments and those of others who said Dell’s deal appears fishy on the surface, no comments from defenders of Prop 13 and opponents of split roll property taxes allowing for tax increases on commercial property found their way into the article.

To the delight of the pro-split roll forces no doubt.

The Times article plays right into the hands of those who want to undo Prop 13 and create a split roll property tax system to create frequent reassessments on commercial property despite economic consequences.

The Times headline of the story on its website (different from the headline in the newspaper) cheered anti-Prop 13 activists by stating: “Prop 13 Lets Business Sidestep Taxes.” Not true. The article pointed out that the current change in ownership rules came from legislative action.

Those wanting to undo Prop 13 will push forward using this article as a lance to attempt to cut away at Prop 13, aided and abetted by a story void of context from those who both oppose a split roll and oppose any methods to get around the common sense reading of the law.

The property tax law needs diligent enforcement, not a re-write.

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