Taxman knocks at City Hall’s door
The city of South Lake Tahoe could owe $18,374 in back property taxes on the building it has been leasing without paying taxes for the past 15 years.
While El Dorado County tax records show the outstanding amount on the city service center at 1900 Lake Tahoe Blvd., city officials say the government is exempt from such a payment.
The final decision will come from the El Dorado County Board of Supervisors with the written consent of county counsel – who is still reviewing the case.
According to California law, property owned by or “belonging to” a public government entity is exempt from property taxes.
But John Winner, El Dorado County assessor, said because the city leases the building from a private owner, someone must pay taxes on the property.
According to the “triple net” lease agreement between the city and property owner William Floyd, the city is the responsible party.
“All property in California is subjected to property taxes, unless it is exempt,” Winner said. “To my knowledge there’s not an exception that’s afforded to the city because they don’t own the property.”
Although the city has leased the building since 1982, the assessor’s office only learned that the building hadn’t been on the county tax roll in November 1996.
At that time, Floyd, who resides in Pismo Beach, Calif., said he was issued a tax bill for the past four years – the legal limit for collecting back taxes – and forwarded it to the city.
Dennis Crabb, city attorney, contends the city is not liable for the back or future taxes, based on his interpretation of a section of the Revenue and Taxation Code which states that “property belonging to … a city” is exempt from property tax.
Because no taxes have ever been paid on the property, Crabb believes a liberal interpretation of that law applies.
“The City Hall at 1900 Lake Tahoe Boulevard belongs to the city of South Lake Tahoe within the statutory definition due to its long-term interest in the premises and the nature of its use,” he wrote in a letter to the county counsel’s office.
The building houses some city administration offices and the City Council chambers.
Kerry Miller, city manager, echoed Crabb’s argument.
“It’s not appropriate for the citizens of this community to pay El Dorado County for a building that is clearly for public use,” Miller said. “It has always been for public use and qualifies for a tax exemption.”
Joe Harn, county auditor-controller, would be the administrator to cancel the property tax bill if such an action is ordered by the Board of Supervisors.
However, he noted that El Dorado County – a government entity – leases a few buildings, on which property tax is paid.
Diane Roddenberry, fiscal assistant in the county tax collector’s office, said the $18,374 owed on the building includes a number of penalty charges.
She said if the dispute is not settled and that amount is not paid by June 30, the taxpayer would be in default. If it is not paid by November, the building could be sold for the amount of taxes owed, she said.
Crabb said because the city appealed the tax bill within a certain time of receiving it, he believes late fees and penalties will not be applicable if the city is found to be liable.
If supervisors determine taxes are owed on the building, the city could take the issue to court upon approval from the City Council, Crabb said.
Support Local Journalism
Support Local Journalism
Readers around the Lake Tahoe Basin and beyond make the Tahoe Tribune's work possible. Your financial contribution supports our efforts to deliver quality, locally relevant journalism.
Now more than ever, your support is critical to help us keep our community informed about the evolving coronavirus pandemic and the impact it is having locally. Every contribution, however large or small, will make a difference.
Your donation will help us continue to cover COVID-19 and our other vital local news.
Start a dialogue, stay on topic and be civil.
If you don't follow the rules, your comment may be deleted.
User Legend: Moderator Trusted User