Senate Bill 259 will be presented to the Senate Governance and Finance Committee on Wednesday. It would correct an outdated interpretation of property change of ownership that has been the subject of multiple instances of illegitimate tax evasion.
A prime example is the 2006 purchase of a hotel in Santa Monica where the purchaser realized he could structure the transaction without any one entity owning a 50 percent majority share in the property. Despite the fact that 100 percent of the ownership of the hotel changed hands, the property was not reassessed, resulting in a tax loss to Los Angeles County of over a million dollars annually.
SB 259 would provide that a change in ownership occurs when 90 percent of a legal entity’s ownership interests transfer in a single transaction. Bates’ bill is supported by the Howard Jarvis Taxpayers Association, the California Chamber of Commerce, the California Business Roundtable and the California Business Properties Association. A similar bill authored by former Assemblyman Tom Ammiano (D-San Francisco) earned bipartisan support in 2014 and cleared the Assembly, only to die in the Senate.