Golden State Today

Sen. Patricia Bates (R-Laguna Niguel) has reintroduced legislation to update the interpretation of property “change of ownership” in Proposition 13 (People's Initiative to Limit Property Taxation of 1978.).

According to her, “it is not right that some people have exploited an outdated interpretation of Prop. 13 to avoid paying the property taxes that they legitimately owed.”

Bates introduced Senate Bill 706, which redefines “change in property ownership.”

Proposition 13 created a loophole for businesses when transferring ownership of their properties. To take advantage of this loophole, business owners must not have more than a 50 percent share in the partnership in order to avoid a reassessment. By not having a reassessment, the new owners can avoid paying new or higher taxes.

The 2006 sale of the Miramar Hotel was given as an example, where the purchaser structured the sale without any of the partners owning more than 50 percent share. The property was not reassessed and the resulting tax loss to Los Angeles County was estimated to be more than $1 million annually.

Several stakeholders voiced support for this bill, including Jon Coupal, President of the Howard Jarvis Taxpayers Association, according to bates.cssrc.us.

In a statement, he said, “the sort of abuse of the 'change of ownership' rules that occurred with the sale of the Santa Monica hotel can easily be remedied by this legislation.”