Pre-Hearing Exchange of Information
The San Francisco Assessor’s office has instituted a new policy concerning real estate tax appeals. If a taxpayer fails to respond to the Assessor’s pre-hearing request for information about the subject property, the Assessor will typically request a “pre-hearing” with the Assessment Appeals Board and ask that the hearing be postponed until the taxpayer complies with the information request. The Assessor has a right to require property owners to provide “information and records” concerning the real or personal property owned or controlled by the taxpayer. This right is quite broad and includes construction and development costs and details of the taxpayer’s acquisition of the property. (California Revenue and Tax code Section 441(d)). In many cases, the taxpayer was not providing the Assessor with information prior to the hearing or would fail to appear at all, which would create unnecessary work for the Assessor’s office and add to the pending backlog of appeals. This new policy is to allow the Assessor to prepare for the hearing, with the added benefit of pressuring the taxpayer to decide whether to proceed with the hearing or withdraw the appeal. Property owners with appeals pending should be prepared to respond to this request for information in a timely manner to avoid delays.
On the flip side, taxpayers also have the right to receive the information and analysis that the Assessor intends to use at the tax appeal hearing, provided that a request is made at least 30 days prior to the hearing. This is a powerful tool that may be used to fully prepare for a tax appeal hearing and allows the taxpayer to formulate arguments in response to the Assessor’s position.
Big Brother is Watching
The Assessor has also recently requested that certain large commercial property owners provide the Assessor with detailed information concerning their tenants, including copies of the rent roll, leases, tenant contact information and lease abstracts. The purpose of this request is stated to be “for updating records in the Assessor-Recorder’s Office, including identification and assessment of business and personal property”. Apparently there is a concern that certain businesses operating in San Francisco have not properly registered with the Tax Collector and that there is lost personal property tax revenue on the table.
Landlord’s are justifiably concerned that providing this information could result in unintended consequences, including unhappy tenants, or, in a worst case, legal claims for disclosing confidential information. While the landlord may be protected from any such claims due to the fact the request came from a government agency, the intrusive nature of such requests have made some landlord’s feel uneasy. Some landlord’s have relied on existing case law that arguably limits the extent of information that may be requested concerning third parties.
Regular Assessment Appeal Period Opens July 2
The open filing period for appealing assessed property values for 2015-2016 begins on July 2, 2015 and expires on September 15, 2015. No appeals may be filed after September 15, 2015. Although the current real estate boom in San Francisco has raised most property values, there is still the opportunity to appeal this years’ assessed value due to particular circumstances or an excessive assessment that remains on the roll.
Although the economic situation has helped reduced the backlog of assessment appeals, there are appeals pending from as early as 2007. The Appeals Board reports that approximately 3,957 appeals remain in process. This is quite a daunting task for a small office of only 4 staff and three separate part-time Appeals Boards, but the office has done an admirable job of resolving the many appeals that were filed during the real estate downturn.
The issues discussed in this update are not intended to be legal advice and no attorney-client relationship is established with the recipient. Readers should consult with legal counsel before relying on any of the information contained herein. Reuben, Junius & Rose, LLP is a full service real estate law firm. We specialize in land use, development and entitlement law. We also provide a wide range of transactional services, including leasing, acquisitions and sales, formation of limited liability companies and other entities, lending/workout assistance, subdivision and condominium work.