Prop. 13 loophole gives edge to big players (LA Times) [View all]

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Prop. 13 loophole gives edge to big players

Change of ownership, key to reassessment, is cut-and-dried for homeowners but not businesses. It means a loss of tens of millions of dollars a year in tax revenue.

By Jason Felch and Jack Dolan, Los Angeles Times
May 4, 2013

In 2006, billionaire computer magnate Michael Dell, one of the world's richest men, agreed to pay $200 million for the Fairmont Miramar Hotel, a beachfront landmark in Santa Monica that long has been a retreat for Hollywood starlets and U.S. presidents.

A few months later, Dell tore up the contract.

He still wanted the hotel. But his attorneys had found a simple way to reshuffle the deal to avoid a legal change in ownership.

The maneuver saved about $1 million a year in property taxes — an option available only to businesses, not homeowners, under the arcane rules governing Proposition 13.

http://www.latimes.com/news/local/la-me-dell-property-20130505,0,6993978.story