Mayhew Tech Center, Phase II v. County of Sacramento

I concur in the judgment and much of the majority opinion. I write separately to turn square the corners of the controversy and to set out in material detail the provisions of the agreements at issue.

The county (County) argues that the state (State) is party to a lease option agreement and that its only present interest is a possessory interest in the *511 leasehold; the title holder, ComPlan, Inc. (ComPlan), which is not exempt from taxation, holds the interest subject to taxation. The County also argues that if the agreement is construed to give the State a beneficial interest sufficient to escape taxation it violates the debt limitation provisions of article XVI, section 1 of the California Constitution. To avoid that result the County argues that the agreement should be construed as a lease.

The County poses the problem as a dilemma; either the State’s interest is as a lessee, in which case ComPlan is liable for the property taxes, or it has entered a contract of sale which violates the debt limitations of the California Constitution. The dilemma does not hold up under analysis.

I agree with the majority opinion that the subject property is exempt from property taxation…

These consolidated cases involve Sacramento County’s effort to assess a property tax on land and improvements occupied by California’s Franchise Tax Board under a lease-purchase agreement. We conclude the lease-purchase agreement is authorized by statute, does not violate the debt limitation provision of article XVI, section 1 of the California Constitution, and exempts the property from taxation pursuant to article XIII, section 3 of our Constitution.

Facts

In 1982, the State of California (the State) issued a request for proposals for construction of a new facility for the Franchise Tax Board in Sacramento. The State accepted the bid of Mayhew Tech Center, Phase II (Mayhew), a general partnership. Under the agreement, (1) a trustee issued certificates of participation to finance acquisition of the property and construction of the facility; (2) Mayhew and the State entered into a long-term lease; (3) the State’s rental payments were used to pay the certificate holders; (4) Mayhew transferred its right to receive rental payments to the trustee for the benefit of the certificate holders; (5) Mayhew transferred legal title to the property to ComPlan, Inc. (ComPlan), a…

These consolidated cases involve Sacramento County's effort to assess a property tax on land and improvements occupied by California's Franchise Tax Board under a lease-purchase agreement. We conclude the lease-purchase agreement is authorized by statute, does not violate the debt limitation provision of article XVI, section 1 of the California Constitution, and exempts the property from taxation pursuant to article XIII, section 3 of our Constitution.

In 1982, the State of California (the State) issued a request for proposals for construction of a new facility for the Franchise Tax Board in Sacramento. The State accepted the bid of Mayhew Tech Center, Phase II (Mayhew), a general partnership. Under the agreement, (1) a trustee issued certificates of participation to finance acquisition of the property and construction of the facility; (2) Mayhew and the State entered into a long-term lease; (3) the State's rental payments were used to pay the certificate holders; (4) Mayhew transferred its right to receive rental payments to the trustee for the benefit of the certificate holders; (5) Mayhew transferred legal title to the property to ComPlan, Inc.…