COUNTY OF SAN MATEO

Inter-Departmental Correspondence

County Counsel

DATE:

May 17, 2004

BOARD MEETING DATE:

July 6, 2004

TO:

Honorable Board of Supervisors

FROM:

County Counsel

SUBJECT:

Claims for Refund of 1992, 1993, 1994, 1995, 1996 and 1997 Property Taxes by Genentech, Inc. (“Genentech”) (various properties, Assessor Parcel Numbers, and account numbers in South San Francisco)

Recommendation

Deny Genentech’s claims for refund of property taxes paid for the 1992, 1993, 1994, 1995, 1996, and 1997 tax years for various properties located in South San Francisco, California.

Background

Genentech owns property located in South San Francisco, including land, improvements, and personal property. Genetech has filed appeals with the San Mateo County Assessment Appeals Board (the “AAB”) with respect to its property since at least 1991. The AAB has issued decisions relating to the 1991, 1992, and 1993 tax years, and appeals are now pending for 1994, 1995, 1996, and 1997.

In 1996, the AAB issued a decision which, among other things, set 1991 base year values for many of the properties at issue here (the “1991 Decision”). More recently, in November 2002, the AAB issued a decision relating to the 1992 and 1993 tax years (the “1992-1993 Decision”). In its decision, the AAB determined the value of Genetech’s property, and made a number of legal and factual findings relevant to future property assessments (e.g., the classification of certain types of property, the assessability of certain expenditures, and the economic life of various classes of assets).

The Assessor applied the 1992-1993 Decision to Genentech’s property for the 1994 and subsequent tax years, and made appropriate changes to the tax rolls for those years. Further, subsequent to the issuance of the 1992-1993 Decision, the Assessor issued a Notice of Proposed Escape Assessment for Genentech’s property. The Assessor has arranged for refunds to Genentech of overpaid property taxes after giving consideration to changes necessitated by the 1992-1993 Decision and the escape assessments. Notwithstanding these refunds, Genentech has filed and continues to pursue Claims for Refunds of Property Taxes for the 1992, 1993, 1994, 1995, 1996, and 1997 tax years, copies of which are attached to this memorandum. The parcel and/or account numbers that are the subject of these claims are at Appendix A of each of the attached claims.

Discussion

To the extent that the tax refunds Genentech has received to date have not mooted the instant refund claims, they should nevertheless be denied. The various legal factual, and valuation related contentions that Genentech raises in the instant claims have been addressed at length by the AAB in the 1991 and 1992-1993 Decisions.

In this office’s view, the Assessor has properly implemented the AAB’s 1991 and 1992-1993 Decisions to the extent that they bear on the 1992 and 1993 and subsequent tax years, It also appears that the AAB reached correct conclusions in the course of arriving at the 1991 and 1992-1993 Decisions, in light of the evidence presented and controlling law. To the extent that the instant claims seek to challenge the 1991 or 1992-1993 Decisions, Genentech should pursue appropriate judicial remedies. Similarly, to the extent that Genentech’s claims raise matters different from those addressed in prior AAB decisions, the AAB should consider them in the first instance in the course of addressing Genentech’s pending appeals for the 1994 through 1997 tax years.

Vision Alignment

This action furthers the County’s commitment to responsive, effective and collaborative government, and the goal that government decisions be based on careful consideration of future impact, rather than temporary relief or immediate gain.

Fiscal Impact

No fiscal impact is anticipated, unless the claims for refund are granted.