Corporations Put Assessor on Defensive
Taxpayers foot the bill for appeals by MMSA, Ormat, 8050
Over the last three years, Mono County has spent more than $439,000 defending itself against property value assessment appeals filed by three property owners: Mammoth Resorts, Ormat Technologies, Inc., and Mammoth 8050.
For 2017, Mono County had a secured assessment roll value of roughly $5.3 billion. It’s unsecured roll value was approximately $401 million. Beck reported at a Mammoth Unified School District Board meeting on Thursday, February 22, that 2017 was the third highest roll total in Mono County history.
The assessment roll value reflects the total assessed value of property in Mono County. That figure determines the property tax revenue for the County in a given year.
If a property owner feels that his or her property has been assigned an assessed value that is higher than it should be, he or she can appeal that assessment. Mono County currently has $2.4 million in reserves on-hand to pay back property owners who successfully appeal their property value assessments.
As was reported last week, there are currently 398 active assessment appeals filed against Mono County. Of those appeals, 368 were filed by three property owners: Ormat Technologies, Inc. (102), owners at Mammoth 8050 (224), and Mammoth Mountain Ski Area (42).
Beck said that the County contracts consultants to assist with settling complicated appeal claims.
Beck said that the $439,000 excludes hours contributed by County Counsel’s Office, whose staff defends the County when appeals go to court that are “not too complicated or too high in value.”
Beck said that Mono County uses the services of three consulting firms to assist with claims pertaining to geothermal power, ski areas, and other complicated appeals. Those groups are Harold Bertholf Inc. (for Ormat appeals), Valuation Consulting Group (Ski Resort appeals), and Norman Dowler, LLP.
According to Beck, Alterra Mountain Company’s 42 active appeals won’t be settled until the California Department of Tax and Fees Administration’s Legal Entity Ownership Program (LEOP) reports the full sale value of what are now Alterra’s properties. Beck said the appeals could be settled without that information, but, “it would be very useful information in a settlement negotiation,” said Beck this week of the fair market value of Alterra’s properties at the time of sale in 2017.
In 2005, Starwood Capital Group acquired Mammoth Mountain Ski Area from Dave McCoy for $365 million. In an interview this week, Beck called that process “contentious.” MMSA appealed the purchase price and the case did not get settled until 2011.
Mammoth Resorts’ new owners can’t pay taxes on the resort’s sale until the County Assessor’s office can determine the total consideration for the exchange, and therefore the assessed value of the properties involved. Total consideration is a technical term that excludes certain intangible, non-taxable aspects of a property or business that contribute to its value. In the case of MMSA, these intangibles include brand name recognition and marketing power.
Beck said that, when carrying out an assessment, the County always hopes that the assessed value of a property will be as close to the fair market value as possible. However, in the case of a transfer of ownership or change of control within a large corporation that owns properties, some of the fair market value cannot be assessed or quantified for the tax roll. The property owner is incentivized to advocate that those intangibles make up a large proportion of the corporation’s total consideration, so that the assessed value of its properties will be lower.
LEOP has not yet provided a purchase price for Mammoth Resorts, though it is rumored that the entity’s ownership was transferred for $800 million. The resort now has property in three counties, which will make the assessment more complex than the last time MMSA transferred ownership. Beck said he’s confident that the County will receive a figure for the total consideration of Mammoth Resorts by the end of 2018.
If Alterra Mountain Company chooses to appeal Mono County’s assessment of its properties, the company will still have to pay taxes for 2018 and 2017. However, if the appeal is settled in Alterra Mountain Company’s favor, Mono County could be required to pay back a large sum of tax revenue, plus roughly 3 percent in interest, applied annually, according to Mono County Finance Director Janet Dutcher.
MMSA’s 42 active appeals date back to 2012.
If all of MMSA’s existing active appeals are settled in the ski area’s favor, Mono County could be required to pay back as much as $2.5 million in property tax revenue to Alterra Mountain Company.
“For all of our districts, it makes a it difficult for them to budget it they don’t know what kind of outcome they’ll have,” said Beck this week.
Inyo County Assessor Dave Stottlemyre said that it is common for large property owners, or “big players” to file property value assessments annually. “We [County Assessors’ Offices] have to follow state guidelines in appraising properties,” said Stottlemeyer in an interview this week. “Usually the big players have attorneys, and what they do is they kick out appeals automatically.” He said that those appeals can be a financial burden to small counties. When asked why a property owner would spend their money appealing their assessed property value annually, Stottlemyre said he could only speculate. “Sometimes, the squeaky wheel gets the oil. I think maybe they hope that if they play hardball, you’ll lower their taxes. They just want to get out from paying property taxes, like everyone else, but they can afford to hire the attorneys to do it.”
Stottlemyre said this practice hurts counties and their taxpayers. “It seems like the smaller counties are the ones who suffer. The schools, the county, the special districts, and the taxpayers in general.”
Beck expects many of currently active appeals to be settled within 2018. Beck said that a hearing has been scheduled for May 16, 2018 for the Mammoth 8050 Appeals. Once Alterra and Mammoth 8050 have been settled, Beck said Mono County will address the 102 active appeals filed by Ormat since 2010. If all of the appeals filed by Ormat, MMSA, and Mammoth 8050 are settled in the applicant’s favor, the County could be required to pay out as much as $8 million in property tax.
Of the upcoming assessment of Alterra Mountain Co. properties, Stottlemyre said, “They [Mono County] are going to have a battle.”
