California Property Values Affected by COVID-19 Issues

BE PROACTIVE IN FILING YOUR 2020/2021 ASSESSMENT APPEAL APPLICATION

Sean P. Keegan, EVP & Principal

With the COVID-19 pandemic, each taxpayer has been impacted in some way from the personal changes, someone known to you that has become ill, workplace distance rules, more video conferences, business interruption, effects on manufacturing processes, unemployment, and tenants’ ability to pay their rent timely. California real property owners (multifamily, hospitality, commercial and industrial property owners) and business owners who own machinery or equipment, referred to as personal property, will have the opportunity to review their County Assessment(s) when the Notices are issued this summer or when the 2020/2021 Tax Bills are delivered. After the Notice is received, the first step is to determine if the County Assessor’s enrolled value(s) for your property is fair or does it exceed the market value as of January 1, 2020.

In the cases where the County Assessment exceeds what you believe to be the “fair market value” (FMV), an Assessment Appeal Application may be completed and filed with the County Clerk of the Assessment Appeals Board (Board) completing the second step. These “Appeal Applications” are filed to contest the fair market value where the taxpayer believes the actual value is less than the property’s factored base year value (Proposition 13 – Value). Proposition 8, which was approved by the legislature in late 1978, provided for value declines to be recognized after a property was acquired (referred to as “Prop. 8” – Decline in Value Appeals). In some situations, the County Assessor may determine that the enrolled value should be lowered or that a hearing is necessary.

Due to COVID-19, Governor Newsom’s Executive Order restricted access to many businesses when he ordered “all individuals living in the State… to stay home.” (EO No. 33-20, 03/19/20). In many cases, conditions resulting from COVID-19 have caused “actual” damage or value loss to equipment, tenant fixtures, and real property. The Revenue & Taxation Code (RTC) provides guidance for “misfortune or calamity” damages and the available relief under Section 170. The County Assessors have stated that the conditions resulting from COVID-19 were not known or measurable until early March of this year. In these uncertain times, we are recommending to our clients that a 2020/2021 Appeal Application be filed by the County filing date (09/15/20 or 11/30/20) to protect your rights (RTC 1603).

With the economic impact of COVID-19 which is now in its fourth month and the effects that will be felt for many more months, we are also recommending a proactive approach to providing valuation information this fall to the County Assessor’s Office for the January 1, 2021 lien date. The information may assist their office in understanding your property and enrolling a lower value. We will continue to monitor information from the Governor’s Office, the State Board of Equalization, and the County Assessor’s Websites for new developments which may provide relief opportunities to you and our clients. Stay Safe & Healthy!