290 Div. (EAT) v. City and County of San Francisco

Facts: A buyer purchases property from a city for a below-market price in a leaseback agreement with the city for city employees to use the property. As a change of ownership, the county assessor evaluated the property’s fair market value (FMV) at an amount greater than the purchase price the buyer paid for the property. The buyer seeks a FMV amount equal to the price paid to purchase the property and a refund for excess property taxes paid.

Claim: The buyer claims the FMV was incorrectly calculated by the county assessor since the assessor failed to recognize the leaseback with the city to use the property at a below-market rate.

Counterclaim: The county assessor claims the property was correctly valued since the city agreed to the provisions in the leaseback as a proprietor, rather than as a regulatory agency advancing public welfare.

Holding: A California appeals court holds the property was correctly valued by the county assessor at its FMV without concern for the leaseback agreement since the leaseback was an arms-length agreement entered into between a buyer and a city acting in its proprietary role, rather than advancing police powers related to public welfare. [290 Division (EAT), LLC v. City and County of San Francisco (2022) 86 CA5th 439]

290 Div. (EAT) v. City and County of San Francisco

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