County of Los Angeles v. State Board of Equalization

This appeal presents the question of whether defendant State Board of Equalization (the Board) properly equalized and adjusted the assessed value of certain rail transportation corridor properties owned by real parties in interest City of Long Beach and City of Los Angeles (together the Cities) but located outside their jurisdictional boundaries. In 1994, the Cities acquired from two railroad companies the subject property interests in the Alameda Corridor, which connects both the Port of Long Beach and the Port of Los Angeles with a national transportation hub near downtown Los Angeles.

Article XIII, section 11 of the California Constitution (discussed, post) limits the taxation of real property that is owned by a local government and located outside its jurisdictional boundaries (hereafter sometimes referred to as extraterritorial property) by restricting the maximum valuation of that land. Extraterritorial property is assessed for taxation purposes by the county in which it is located and is then equalized by the Board. Under section 11, subdivision (a) of article XIII, however, extraterritorial property is generally taxable only if it was “taxable when…