Inter-Departmental Correspondence




March 25, 2002


April 16, 2002



Honorable Board of Supervisors


County Counsel


Claims for Refund of Property Taxes: APN 059-036-080 (filed by Derby Davidson) and APN 057-281-120 (filed by David and Cheryl Ringman) and Resolution Delegating Authority to County Manager on Such Claims


Deny the claims for Refund of Property Taxes and adopt a resolution authorizing the County Manager to deny property tax refund claims raising similar legal issues.



The County of San Mateo has received two claims for refunds of property taxes from Derby Davidson, who owns property located at 1348 Oxford Street, in Redwood City, one claim for a refund of $14.01 in taxes paid for 1997-1998, and the other for $122.76 in taxes paid for 1998-1999. In addition, the County has received four claims for property tax refunds from David and Cheryl Ringman, seeking refunds of $43.79, $819.45, $816.14, and $806.73, for the 1998-1999, 1999-2000, 2000-2001 and 2001-2002 tax years, respectively.



Mr. Davidson's and the Ringman's refund claims are based on their assertion that the Assessor improperly increased the assessment on their property in the tax years from 1997 through 2002 by more than 2% over the respective previous years' assessments. The instant claims appear to be prompted by a recent decision of the Orange County Superior Court, wherein a judge held unconstitutional the well-established California assessors' practice of "recapturing" base year values for properties in years subsequent to Proposition 8 reductions in taxable property values.


Pursuant to Proposition 13, California law generally states that real property is to be assigned a taxable value equal to its market value as of the 1975 lien date, or as of the date (subsequent to the 1975 lien date) that the property is newly constructed or changes ownership (this value being commonly referred to as the "base year value"), in each case adjusted for inflation by a factor not to exceed 2% per year. Cal. Rev. & Tax. Code Sections 51(a)(1), 110.1.


However, Section 51(a)(2) of the California Revenue and Taxation Code, which implements Proposition 8, provides for a reduction in the taxable value of property to its market value where the market value has declined below the prior year's taxable value.


This office recommends that the Board decline to follow the Orange County decision (and that the Board therefore deny Mr. Davidson's and the Ringmans' refund claims). First, the Orange County decision represents an unprecedented break with long-standing practice regarding the recapture of reductions in assessments due to declines in property market values. Indeed, appellate courts in this state have sustained the constitutionality of "recapturing" base year values, albeit in unreported decisions, and, to date, every assessor in this State has treated declines in value under Proposition 8 as temporary, and not subject to Proposition 13's 2% limit on taxable value increases.


Similarly, the State Board of Equalization has agreed with assessors that declines in value made pursuant to Proposition 8 are temporary, and not subject to 2% maximum increases from year to year upon restoration of property value. Further, the Orange County decision, even while not binding precedent, appears legally flawed, and any similar decisions will likely be challenged at the appellate level.


Because of the broad publicity that the Orange County decision has received, we anticipate that the County will receive many more claims similar to those of Davidson and the Ringmans. Consequently, we further recommend that the Board pass the attached resolution authorizing the County Manager to act on any subsequent claims raising the same issue (i.e., claims seeking refunds on the basis of the Assessor not applying a 2% limit on base year value "recaptures" after a Proposition 8 reduction).


Vision Alignment

The implementation of this proposal will further commitments and assist in achieving goals set forth in the County Shared Vision 2010 report. Specifically, this proposal implements the commitments of providing "responsive, effective and collaborative government." Similarly, the instant proposal will help the County to achieve the goal of "A[g]overnment decisions are based on a careful consideration of future impact, rather than temporary relief or immediate gain."


Fiscal Impact

The implementation of this proposal will result in no fiscal impact.







John L. Maltbie, County Manager


Warren Slocum, Assessor-County Clerk-Recorder


Tom Huening, Controller


Lee Buffington, Tax Collector-Treasurer

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