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sr-022272-8dCITY OF SANTA MONICA 6~~~~~ DATA,: February 3, 1972 ~~"~ TO: Perry Scott, City Ifanagar FROM: G. Y. Fitzgerald, Airport Direetor " r i ~~~ ESE T 1`C CITY C U CiL FE622 1972 rHls MUST s~ AETURNFD 70 7HE CITY CLERK'S OF¢'~gg FDR flL1NG. SUB.JvCT: County tax assessment on City aircraft tie-down aret~s This is purvuant to the County of Los Angeles (Tax Assessor} letter of January 24, 1972, copy o£ which is attached, relative to individual possessory interest tax assessments against aircraft owners occupying City-operated tie-dorm spaces, and its potential tlaretat to airport revenues, The City-operated aircraft tie-down areas produces annually approsim2<tely $100,000 in revenues based on month-to-month rental-of aircraft tie-down stalls of an average rental rate of $40. per month per stall, or $':80.00 per year, The county assessor, by his attached letter, is groceeding to assess each of the City's tie-down tenants possessory interest tax rang- ing froru $5.00 to $10.00 per stall. This charge is directed only against the City's tie-down tenants, and eat against the fired b~.sed operators tie-down tenants as understandably the fixed-based operator is already gayiag the possessory tax. The rot result of the county assessor's action will be to drive the City aircraft tie-•dowr. terarts aidta the fixed based operators tie- down areas where they would eat have to gay the tax, riany of cur tie- down tenants have indicated they will move before paying the tax, and it is anticipated many mare will just do su rp for to March 1, 1972, with a most disastrous effect on the airport controlled tie-do;an areas. This affice has researched possibly solutions to this di.ler~ma and it appears that the only DXe'ACL1C«i alteznative would be For the City to absorb the cost of the assessment in the s2~e cagy the fixed-based operators are c9arrt-n~ly doing. Zt would s, em prudent to absorb a $5.00 an:aual charge in order to save a $480,00 aaa.ual accat:at.The total annual estimated east o£ absorbing this would .gproxi.m.:te $1,200, but it could be the effect of preserving an annual revenue of approximately $100,000. Perry: Scott, City Manager February 3,.1472 Page 2 .Last year we increased tie-down rates an average of $10.00 per month par stall which resulted in loss of some aircraft tie-down tenants in retaliation. Time is of the essence in this matter in arriving at a positive decision, as we very well could result in wholesale tie-down cancella- tions in the near future. CVF :gw GC: to Director of Finance Gity Attorney a~°=,. COUNTY OF LOS ANGELES ~~~ ~~i° OFFICE OF ASSESSOR ~;_ ~, ~ SOO W. TEMPLE STREET ~c¢~r°z°~>~. LOS ANGELES, CALIFORNIA 90092 Px~L7P e. wa,TSO:v January 2.ta, 1972 ASSESSOR Mr. Clyde V, Fitzgerald Airport Director Santa Monica Municipal Airport Clover Field Santa Monica, California Dear Mr, Fitzgerald: This letter is to inform you that each of your tenants renting ah aircraft tie-down. location will receive a copy of the enclosed 1ett.er. The letter i.s intended to provide your tenants w?th an explanation of the reasoning behind their forthcoming possessory interest assess- ment and to offer notice of such assessment prior to receipt of a tax. bill. The tax bills for these assessments will be issued between March and June. They are due upon receipt and become delinquent after August 31. Ary taxpayer disagreeing with our valuation of his possessory interest may file an assessment appeal between the 3rd Monday in July and September 15th. The valuation approach to appraise the interest has been the capital- ization of economic rent. We have surveyed all publicly-owned airports in Los Angeles County in arriving at our estimate of economic rent. The rental capitalization is limited by our estimate of a reasonably probable term of occupancy and an interest rate to reflect risks at- tendant upon such occupancy. We anticipate some public response to our letter both with our Depart- ment and with your department. We would appreciate your answering any questions by your tenants which you believe capable of answering, If you or your tenants desire additional information, please contact Lloyd Wright, Donald Davis, or Gary Gillan at 625-3611, extension 64870° We would also be available for any meeting at which you or your tenants might desire our presence to answer questions. We appreciate your cooperation in providing us with data essential to the performance of our job and look forward to continuing future con- tact. Very truly yours, PHILIP E. UTATSON sses or Clin`~ Evans ~ . """ "'"'~ Chief, Commercial--Industrial Division CEE:GG:jm Real Property Appraisals Enclosure ~~~~~ ~ct~ . °+ue - PHILIP E. WATSON ASSESSOR C©UNTY OF LOS ANGELES OFFICE OF ASSESSOR 500 W. TEMPLE STREET LOS ANGELES: CALIFORNIA 90012 February 1, 1972 We have completed. a study of airport properties throughout Los Angeles County. As a result of this study, we believe that possession of an aircraft tiedown space on a publicly-oomed airport creates a taxable possessory interest. It is our intention to make an assessment to all such tenants of record as of March 1, 1972. Section 107 of the California Property Tax Laws defines possessory interest. In effect, whenever a private party has the use and possession of real estate owned by a government agency he has a possessory interest. The property tax which results from the valuation on such use and possession is levied against / the private party rather than the tax-exempt government agency. ~,//j Should you be renting a tiedotm space directly from the airport authority on a publicly-owned airport on the lien date, you will be sent a tax bill for your possessory interest.. If you are renting a tiedown from a private party, who is a lessee of the airport, you shculd not expect a tax bill for it will be sent to the master lessee as holder of the possessory interest. Depending upon the size of the space being rented, the proposed market values on these tiedowns range from $200 to $1000. The assessments will be one-fourth of the above amounts or a range from $50 to $250. If you have any questions, please call the Possessory Interest Section of the Los Angeles County Assesso-r's Office at 625-3611, extension 64870. Very truly yours, PHILIP E. WATSON Assessor ~~~~~~~~u ~. .~ ~~ i..;, Clinton E. Ebans~ Chief, Corrunercial-Industrial Division Real Property Appraisals CITY OF SANTA MOh1CA ~~ DATE: January 31, 1912 TO: Clyde Fitzgerald, Director of Airport FROM: Richard L. Knickerbocker-, City Attorney SUBJECT: Tax I have reviewed the County Assessor, and it would tiaithin his rights in changing tax. Ira order to com~oens~ u consider raising the business doirn s letter from the appear that he is a possessory interest s however, we might license tax on tie Niay I have your vieirrs ~rrith regard to this matter. RIC ARD L. KNICKERBOCKER City Attorney RII~:mms