Mitsui Fudosan (U.S.A.), Inc. v. County of Los Angeles

Between 1980 and 1982, Mitsui Fudosan (U.S.A.), Inc. (Mitsui), acquired three parcels of real property in downtown Los Angeles subject to the Redevelopment Plan for the Central Business District Redevelopment Project of the City of Los Angeles. Although this plan limited the density of Mitsui’s planned development to a maximum floor area ratio of 6:1, i.e., 6 square feet of building area to 1 square foot of parcel area, it nevertheless permitted that level to be exceeded, subject to certain conditions, through the transfer of unused floor area ratios from other parcels within the project area. Making use of these so-called transferable development rights or “TDRs,” Mitsui in 1983 purchased from several adjacent landowners at a cost of $8,209,000 sufficient TDRs to permit it to construct an additional 490,338 square feet of building area, more than doubling the density which otherwise would have been permitted.

Beginning in the 1984-1985 tax year, the county assessor increased Mitsui’s base assessment by $8,209,000 to reflect the value of the TDR transactions. This resulted in an increase in property taxes totaling $266,821.10 for the 1984-1986 tax years. Mitsui paid the…