Connolly

We are asked to decide whether article XIII, section 3, subdivisions (a) and/or (d) of the California Constitution preclude imposition of an ad valorem tax on privately held leasehold interests in real property owned by the University of California and improved with homes owned and occupied by the university employees who hold the leases. Because appellate decisions have created uncertainty as to the tax status of these interests, and similar properties comprise a significant part of the tax base of several local governments and school districts, we address this question notwithstanding significant procedural issues that have arisen in the course of this litigation as a consequence of the manner in which plaintiffs have proceeded.

We conclude that plaintiffs are not entitled to the tax exemption they seek. Although leasehold interests in university property may be property that is exempt from taxation under the exemption afforded by article XIII, section 3, subdivision (d) (section 3(d)), when a lessee of university property uses that property as a site for a privately owned residence, the property is not “used exclusively for public schools, community colleges, state…