Terrace Garden Apartments v. County of Alameda CA1/4

I. BACKGROUND

The underlying dispute in this case involves the proper characterization of a lease with an option to purchase under the property tax laws. In 1996, Terrace Garden leased an apartment complex in County, APN 77C-1310-4-10 (Property). The lease included a purchase option, which Terrace Garden exercised in 2008. The County Assessor viewed

1 the purchase pursuant to the option as a change in ownership and, as a consequence, reassessed the Property at its fair market value as of the purchase date, October 29, 2008. Terrace Garden, however, alleges that the original 1996 lease was a financing contract and thus the Property actually changed ownership in 1996, when the lease and option were executed, and should have been reassessed at its fair market value at that time. In August 2009, Terrace Garden filed applications for changed assessment, seeking administrative review both on the change of ownership issue and on the issue of valuation. In an extensive opinion dated July 28, 2011, the County’s Hearing Officer concluded that Terrace Garden had failed to establish the elements of a financing lease and therefore upheld the County’s 2008 change of ownership date.…