State Bd. of Equalization v. Board of Supervisors
| Decision Date | 15 May 1980 |
| Citation | 164 Cal.Rptr. 739,105 Cal.App.3d 813 |
| Court | California Court of Appeals Court of Appeals |
| Parties | STATE BOARD OF EQUALIZATION, Plaintiff and Appellant, v. BOARD OF SUPERVISORS OF the COUNTY OF SAN DIEGO et al., Defendants and Respondents. Civ. 22182. |
Gray, Cary, Ames & Frye and Peter G. Aylward, William S. Boggs and Mark L. Mann, San Diego, for defendants and respondents.
*
The State Board of Equalization (Board) appeals the judgment denying its petition for writ of mandate. The issue presented is the validity of the Board's regulation which precludes reducing real property value if actual market value reduction occurs after the base assessment year under Proposition 13 (1975-76). Because of the passage of Proposition 8 1 in November 1978, the issue
of the regulation's application is limited to the taxable year 1978-79. We affirm the decision of the trial court, holding the Board's regulation invalid.
On June 6, 1978, the electorate adopted Proposition 13, adding article XIII A to the California Constitution. 2 The article was to go into effect July 1, 1978. "13" limited the increase on the value of taxable property to two per cent per year. It also created a new method to be used in determining the value of real property for tax purposes. The taxable value would be based on the 1975-76 full cash value until the property was purchased, new construction was begun, or the real property changed ownership. When one of the above events occurred, the property would be revalued at its fair market value on the date of the change. Unless one of the changes occurred, the taxable property value would not be increased from the 1976-77 full cash value determination more than two per cent per year, starting in 1978-79. The value of real property for tax purposes was no longer the "current market value." Instead, the "acquisition value" was used in determining real property taxable value. However, no specific provisions for reduction due to depreciation or decrease in the fair market value were contained in the proposition.
On June 29, following the passage of "13," the Board adopted temporary tax rule 461(b), which provided:
Before rule 461(b) became final, the Board sent county assessors a letter containing "answers to some frequently asked questions regarding Proposition 13 implementation." Under the heading "Questions and Answers of a General Nature," the following hypothetical question was posed and dealt with summarily:
Three weeks later, the Board issued another letter dealing with a loss of value question as follows:
Effective October 2, the Board adopted final rules stating their position on reductions in taxable value to compensate for a decrease in actual market value.
"Except for annual modification by the inflation rate or changes in value resulting from calamity or the removal of property or a portion thereof, the taxable value of real property shall not reflect any actual market value depreciation or appreciation, whether caused by zoning changes or otherwise, after the base assessment year full value has been established."
On August 18, 1978, the California Legislature adopted Senate Constitutional Amendment 67, eventually designated Proposition 8 ().
On November 7, 1978, the voters adopted "8," which amended the Constitution, specifically providing the acquisition value would be reduced to reflect a decline on real property value. The Board then adopted rule 461(d), expressly providing the "decline in value" amendment of "8" applied only prospectively to the 1979-80 taxable year. Thus for the 1978-79 taxable year, former Two months later, the San Diego Board of Supervisors amended the San Diego Appeals Board rule of notice and assessment procedure, providing one function of the assessment board is "(t)o exercise jurisdiction to review, equalize and adjust individual 1978-79 assessments by taking into consideration substantial damages, destruction or other factors causing decline in value of real property . . .." (Italics added.)
rule 461(b) was applicable and required real property to be assessed and taxed without reflecting any decrease in actual fair market value.
The action of the board of supervisors was a reaction to a chain of events beginning with the filing of applications for equalization with the San Diego County Assessment Appeals Boards, a split of opinion between the appeals boards, a request by one of the boards to the board of supervisors to convene an interboard conference "to discuss application of laws implementing Proposition 13 and 8 which San Diego County Assessment Appeals Boards have interpreted in different ways," and a recommendation of the San Diego County Grand Jury for action.
The assessment appeals boards then informed persons whose petitions for equalization had been denied of the adoption of the new rule promulgated by the board of supervisors.
The court below determined:
The Board argues its rules constitute quasi-legislative administrative action and, therefore, may be held invalid only if "arbitrary, capricious or without basis," citing Culligan Water Conditioning v. State Bd. of Equalization, 17 Cal.3d 86, 93, 130 Cal.Rptr. 321, 550 P.2d 593.
The trial court in considering the identical contention, cited the case of Mission Pak Co. v. State Bd. of Equalization, 23 Cal.App.3d 120, 100 Cal.Rptr. 69, where two questions were presented: First, whether the Board's administrative rules were invalid because they were either without authority or repugnant to the statutory provisions (a legal interpretation); and second, whether the trial court's finding relating to plaintiff's product was supported by competent evidence was it candy or fruit for tax purposes (a factual decision). The court in Mission Pak stated as to the first question, "we recognize that the 'final responsibility for the interpretation of the law . . . rests with the courts.' " (Id., at p. 124, 100 Cal.Rptr., at p. 72.) The court then went on to point out that whether the product was fruit or confection is a fact question and the Board's factual determination would be upheld unless arbitrary and capricious. The same distinction between factual and legal questions outlines the scope of review before this court.
The Legislature has delegated to the Board the responsibility of "prescribing" rules and regulations to govern local boards of equalization when equalizing and assessors when assessing. In addition, the Board shall "prepare and issue instructions to assessors designed to promote uniformity throughout the State and its local taxing jurisdictions in the assessment of property for the purpose of taxation. . . ." (Gov.Code, § 15606.)
The authority granted to the Board is limited by Government Code section 11374 which provides:
"Whenever by the express or implied terms of any statute a state agency has authority to adopt regulations to implement, interpret, make specific or otherwise carry out the provisions of the statute, no regulation adopted is valid or effective unless consistent and not in conflict with the statute and reasonably necessary to effectuate the purpose of the statute." (Italics added.)
If the Board exercises its discretion within the scope of its authority, its conduct will not be disturbed by the courts (Henry's Restaurants of Pomona, Inc. v. State Bd. of Equalization, 30 Cal.App.3d 1009, 1020-1021, 106 Cal.Rptr. 867).
The court below stated quite properly, We agree, as did the Supreme Court in Whitcomb Hotel, Inc. v. Cal. Emp. Com., 24 Cal.2d 753, 757, 151 P.2d 233, 235-236, where, in discussing...
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