The County Assessment Appeals Board (AAB) has reduced the San Francisco 49ers’ Stadium Company’s (Stadco) property taxes on the NFL team’s use of Levi’s Stadium — called a possessory interest — by an estimated $6 million a year, Santa Clara County Tax Assessor Larry Stone announced on Wednesday.
Stone called the amount of the tax reduction “shocking and unexpected.”
Possessory interest is the business value of a private business’ use of public property — for example, a cable company’s use of a public right-of-way or a privately owned restaurant in a public office building. Although the property is owned by the public agency, the business profits from its use of it.
After 21 hearings — the longest such appeal ever, according to Stone — the AAB’s finding was that StadCo gets no business benefit from Levi’s Stadium outside the football season. There was no controversy about the underlying valuation of the stadium.
The Assessor only has a summary of the decision and hasn’t seen the Findings of Fact with the justification for the Board’s decision. “I believe that this is incorrect, and an oversimplification at the heart of a flawed conclusion,” said Stone.
The appeal was first filed in 2015, and renewed every year since. Thus the AAB ruled that the 49ers are due $30.8 million in overpayments.
These refunds must be paid from the agencies that were funded by property taxes. These include: Santa Clara County ($5.3 million), the City of Santa Clara ($2.9 million), Santa Clara Unified School District ($13.1 million) and West Valley Community College District ($3.1 million). The refunds must begin immediately, even without detailed AAB findings.
“This was without a doubt one of the most complicated assessments ever performed by my office. The County Counsel assigned two attorneys and I had a team of people working on this appeal, including our Chief Appraiser,” Stone said in his remarks at a meeting of the affected agencies Wednesday afternoon.
“The agreements are so complicated that we retained a forensic accountant, as well as an… appraiser with experience in valuing stadiums and ballparks,” he said. “The problem of determining Stadco’s interest is that it is defined by dozens of interlocking, intricate agreements …and structured, I believe, to achieve this very outcome.”
The Levi’s Stadium contracts were all approved by the Santa Clara City Council.
The Assessor can appeal this decision by bringing an action in the Santa Clara County Superior Court. However, the appeal can only address legal disagreements with the basis of AAB’s calculations, according to Deputy Assessor David Ginsborg.
In a memo to the Board of Supervisors, Stone wrote that “This is the primary reason why appraisal experience and credentials are so important for Assessment Appeal Board appointments. There is no place for appointing Board members with ‘minimum qualifications.'”
Each Supervisor makes an appointment to the AAB, and in the past Stone has clashed with Supervisors over appointments.