Large landowners in Orange County paid some fat property tax checks last year – but they’d be much bigger if it wasn’t for Prop 13.
Firms such as the Irvine Co. and Walt Disney Parks & Resorts paid tens of millions in property taxes, but there’s pressure to balance inequities of the Prop 13 tax initiative to make them pay more, the Orange County Register reported.
Orange County’s biggest property tax payer for the 2021-22 year was the Irvine Co., which ponied up $191 million, followed by Walt Disney Parks & Resorts, which paid $73.3 million, according to data from Treasurer-Tax Collector Shari Freidenrich.
While the numbers paid by O.C.’s largest companies are high, reformers say they’re not high enough.
The Irvine Co., which owns extensive property, paid 2.45 percent of the county’s $7.8 billion in real property taxes last year and Disney, which runs the 500-acre Disneyland theme park, paid 0.94 percent.
“Disney and the Irvine Company are vastly under-assessed, just on land alone,” Lenny Goldberg, director emeritus of the California Tax Reform Association, which champions changes to Prop 13, told the Register.
Critics of the revolutionary tax initiative passed in 1978 say it left loopholes that favor commercial landlords.
Commercial properties are only reassessed when a single buyer assumes at least 50 percent ownership, or if there are physical improvements to the property, including a new building or parking lot.
So if three investors buy 100 percent of a property, no change of ownership occurs, according to the tax reform group.
And if stock transactions for a publicly traded corporation occur every day, and 95 percent of the company changes hands over time, but no one purchaser buys more than 50 percent of stock, no change of ownership occurs.
Both Disney and the Irvine Co. owned vast tracts of land in the late 1970s, when Prop 13 passed. So the value of that land is locked, based on those disco-era prices – and can only appreciate 2 percent a year.
Commercial improvements, such as new parking lots, hotels and other development, trigger reassessment by the tax collector’s office. But that leaves older properties with cheap taxes compared to their redeveloped cousins.
Goldberg, who conducted a research report on Disney and Prop 13, said the firm paid between $6 and $7 a square foot for its older property, and $120 a square foot for newer developments.
“That’s under-assessment by a factor of 20. And the same thing is true for Irvine,” he said.
Disney and the Irvine Co. declined to comment on their property taxes.
Patrick Murphy, director of resource equity for the nonprofit Opportunity Institute in Berkeley, said California is one of the few states that protects business as well as residential property from big tax hikes.
“I’d go so far as to call California protectionist,” Murphy said. “If I’m already in the state and running a business, I have an advantage over a business that’s just trying to come in.”
In 2020, Proposition 15 would have peeled off much commercial property from the protections of Prop 13. It failed, with 52 percent of voters statewide voting against it.
— Dana Bartholomew
The post Large landowners in OC could pay more property taxes, critics say appeared first on The Real Deal Los Angeles.
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