City of Anaheim v. County of San Diego

Plaintiffs City of Anaheim and City of Riverside (plaintiffs) appeal from a judgment which determined, for the purpose of fixing the tax lien assessment date, plaintiffs acquired their ownership interest in San Onofre Nuclear Generating Station (San Onofre Station) in 1980 rather than in 1977 as plaintiffs contended.

The Problem

The California Constitution, article XIII, section 11, subdivision (a), provides in pertinent part: “... Improvements owned by a local government that are outside its boundaries are taxable if they were taxable when acquired or were constructed by the local government to replace improvements which were taxable when acquired.”

Existing improvements that were taxable when acquired are subject to taxation pursuant to article XIII, section 11. Improvements which are newly constructed after acquisition, however, and which are not constructed to substitute for or to replace taxable improvements are not subject to taxation. (Sacramento Mun. Util. Dist. v. County of El Dorado (1970) 5 Cal.App.3d 26, 34 [ 84 Cal.Rptr. 728 ]; see City of Los Angeles v. County of Mono (1959) 51 Cal.2d 843, 848 [ 337 P.2d 465 ].)

The instant case involves construction of…