COUNTY OF SAN MATEO

Inter-Departmental Correspondence

County Counsel

DATE:

January 11, 2010

BOARD MEETING DATE:

January 26, 2010

SPECIAL NOTICE/HEARING:

None

VOTE REQUIRED:

Majority

TO:

Honorable Board of Supervisors

FROM:

County Counsel

SUBJECT:

Correction of Property Tax Roll

1) Oyster Point LLC, APN(s) 015-010-240 and 015-010-630

2) Park Village Assoc. LLC, APN 034-144-230

3) Millbrae Paradise LLC, APN 024-333-110

RECOMMENDATION:

Approve corrections to the 2009-10 annual secured property tax roll for properties owned by Oyster Point LLC (APNs 015-010-240 and 015-010-630), Park Village Assoc. LLC, (APN 034-144-230), and Millbrae Paradise LLC, APN 024-333-110 to reflect a decline in value as of January 1, 2009 based on a review of changing market conditions.

BACKGROUND:

Revenue and Taxation Code section 4831.5 allows for the correction of the tax roll where there has been a decline in value of the subject property. Over the course of any year, it is not uncommon to uncover some failure to decline a property among the thousands of assessments made by the Assessor. The errors may be caused by defects or delays in information or descriptions provided by assessees, unknown economic or historical information, duplication of assessments or simple clerical or mathematical errors by the assessee or the Assessor, or both. When the correction to the tax roll involves a correction in excess of $50,000, Board of Supervisor’s approval of that correction is required.

DISCUSSION:

1) Oyster Point. The requested correction arises as a result of a decline in value of the subject property. The subject consists of two parcels that total 34.35 acres, with 403,917 rentable square feet (321,549 sf of industrial warehouse and 82,368 sf of R&D/office space), and a 235-berth marina.)

The properties were purchased together on July 2, 2008. The 2009 annual roll value is $84,000,000. The purchase price was negotiated in February 2008 based on market rental rates at that time. With the economic downturn, market rental rates dropped by the 2009 January 1 lien date, while at the same time capitalization rates increased an average of 50 to 70 basis points.

Based on these changed market conditions, it is the Assessor’s opinion that the value of the property and the temporary value on the annual roll should be reduced to $64,160,000 as of January 1, 2009.

2) Park Village. The requested correction arises as a result of a decline in value of the subject property as of the January 1, 2009 lien date based on documentation submitted to the Assessor by the property owner. The property was purchased on September 2, 2004 for $38,445,000 with an adjacent commercial building with an allocated value of $34,445,000. Since the beginning of 2008, several leases have been renegotiated and some leases have defaulted resulting in increased vacancy and decreased income to the property.

Based on these changed conditions, it is the Assessor’s opinion that the value of the property and the temporary value of the annual roll should be reduced to $31,000,000 as of January 1, 2009.

3) Millbrae Paradise. The requested correction arises as a result of a decline in value of the subject property as of the January 1, 2009 lien date based on the decreased market value of the land. The subject property is a 74,182 sf lot under construction with three other lots as a mixed use residential/retail development. The subject property was purchased in May 2005 for $12,000,000 , or $161.76 per sf of land. The 2009 roll value for the land is $12,989,185 or $175 per sq ft.

As of January 1, 2009 it is the Assessor’s opinion that the land value of the subject property has declined to $7,790,000 or $105 per sq. The 2009 roll value for the improvements of $8,320,000 was based on new construction completed as of the 2009 lien date and should not be reduced.

Authorizing this correction of the property tax roll will contribute to the Shared Vision 2025 outcome of collaborative community by demonstrating fiscal accountability.

FISCAL IMPACT:

There is no fiscal impact from the roll corrections to Oyster Point and Park Village as no payment for any of the properties has been made and no refund is due. A refund of $56,542 will be due to Millbrae Paradise LLC as a result of this roll correction.