Laws, Regulations & Annotations

Property Taxes Law Guide – Revision 2012
 

Revenue and Taxation Code

Property Taxation

Part 1. General Provisions

CHAPTER 1. Construction


Division 1. Property Taxation

PART 1. GENERAL PROVISIONS

Chapter 1. Construction

101. Construction. Unless the context otherwise requires, the general provisions hereinafter set forth govern the construction of this division.

Conflicting definitions disregarded.—The definitions given in this chapter are controlling in matters relating to property taxation, whether they conform to the definitions used in the law for other purposes or not. Ventura County v. Barry, 207 Cal. 189, 195; Jameson Petroleum Co. v. State, 11 Cal.App.2d 677. They are probably also controlling in matters relating to special assessments. See Western Union Telegraph Co. v. Modesto Irrigation Co., 149 Cal. 662.

102. Double taxation. Nothing in this division shall be construed to permit double taxation.

Construction.—The mere fact that a business may be required to pay license taxes under the police power of a city under one ordinance and also to pay property taxes for the purpose of revenue under another does not necessarily result in double taxation. Redwood Theatres, Inc. v. City of Modesto, 86 Cal.App.2d 907.

This section prohibits double taxation only with respect to property taxes. Fox Bakersfield Theatre Corp. v. City of Bakersfield, 36 Cal.2d 136; City of Stockton v. West Coast Theatres, Inc., 36 Cal.2d 879. Double taxation occurs only when two taxes of the same character are imposed on the same property, for the same purpose, by the same taxing authority within the same jurisdiction during the same taxing period. Thus, as a matter of law, the imposition of a transit fee on owners of new office buildings as a condition for issuance of a certificate of completion and occupancy did not result in double taxation, since the fee was a development fee, not a tax, since it was charged one time, at the completion of construction of new office space, and did not recur as a property tax, and since it was designed specifically to fund transit maintenance and development. Russ Building Partnership v. San Francisco, 199 Cal.App.3d 1496; Pacific Gateway Assoc. Joint Venture v. San Francisco, 199 Cal.App.3d 1496; Crocker National Bank v. San Francisco, 199 Cal.App.3d 1496; Sacramento Municipal Utility District v. Sonoma County, 235 Cal.App.3d 726.

There was no double taxation of burglar alarm systems assessed against the installer of the systems, as against the contention that the minor components of the systems were fixtures included in the value of the subscribers' realty, where the assessor did not include the value of the systems in appraisals of the real properties and where, although treated as fixtures, the systems were assessed only to the installer/lessor thereof. Morse Signal Devices v. Los Angeles County, 161 Cal.App.3d 570. There was no double taxation of carpeting in a taxpayer's stores, as against the contention that the assessor taxed the carpeting as both part of the structures and as personal property, where the capitalized income method employed by the assessor produced a value for the land and structures exclusive of carpeting and other fixtures, the inclusion of carpeting in the building description section of the assessor's reports was intended merely as a description of the building, and the assessor assessed the carpeting only once as personal property consistent with an assessment practice developed to prevent double assessment of carpeting. May Department Stores Co. v. Los Angeles County, 196 Cal.App.3d 755. There was no double taxation of a commercial rafting company's exclusive and profitable use of a river pursuant to county permit since such property interest is an interest separate from ownership of the land underlying the river. Scott-Free River Expeditions, Inc. v. El Dorado County, 203 Cal.App.3d 896.

There is no violation of the inhibition against double taxation where a taxpayer pays federal income taxes on advances given by the Commodity Credit Corporation on the pledge of his barley crop on which an ad valorem tax is imposed. Burhans v. Kern County, 170 Cal.App.2d 218.

There is a violation of the inhibition against double taxation where the uncontested value of taxable mature trees is added to the value previously determined by the income capitalization formula under which tax-exempt trees have been included. Georgia-Pacific Corp. v. Butte County, 37 Cal.App.3d 461.

Note.—Stats. 1978, Ch. 123, effective May 3, 1978, amended various sections of the Revenue and Taxation Code dealing with the application of taxes between businesses and single-family dwellings. However, the subject bill was conditioned upon the passage of Proposition 8 and the defeat of Proposition 13 in the June 6, 1978 Primary. Based on the fact that Proposition 8 was defeated and Proposition 13 was passed, the amendments proposed by this bill were either repealed or did not become effective.

Back to top


103. "Property." "Property" includes all matters and things, real, personal, and mixed, capable of private ownership.

Manufacturer's interest in products being fabricated.—A manufacturer's possessory interest in products which it is fabricating for the Federal Government, title vesting in the Government as progress payments are made, is not subject to taxation. Since the only use which the manufacturer can make of such products is exclusively for the benefit of the owner, the possessory interest does not constitute property. Douglas Aircraft Co. v. Byram, 57 Cal.App.2d 311.

Franchises.—So-called "special franchises" granted public utilities have been held property subject to taxation. San Jose Gas Co. v. January, 57 Cal. 614; Spring Valley Water Works v. Schottler, 62 Cal. 69, aff'd 110 U.S. 347; Stockton Gas & Electric Co. v. San Joaquin County, 148 Cal. 313; Kern River Co. v. Los Angeles County, 164 Cal. 751; Western Union Telegraph Co. v. Hopkins, 160 Cal. 106; Postal Telegraph Cable Co. v. City of Los Angeles, 164 Cal. 156. But cf. Spring Valley Water Works v. Barber, 99 Cal. 36, holding that a right granted a utility by general county ordinance to lay pipes under the public roads of the county was not taxable as a franchise.

Advances.—A bank account arising from money advanced to a corporation by the United States to provide the corporation, which acted as an independent contractor, with necessary funds to perform a government cost-plus-a-fixed-fee contract is the property of the corporation and is to be taxed to it as a solvent credit even through United States retained a lien superior to all other liens on the balance in the account to secure repayment of the advances under certain contingencies, the account could be used only for the purposes of the contract, withdrawals from the account were subject to the previous approval of the government contracting officer and the balance remaining in the account would be returned to the United States should it elect to terminate the contract. Timm Aircraft Corp. v. Byram, 34 Cal.2d 632.

104. "Real estate"; "real property." "Real estate" or "real property" includes:

(a) The possession of, claim to, ownership of, or right to the possession of land.

(b) All mines, minerals, and quarries in the land, all standing timber whether or not belonging to the owner of the land, and all rights and privileges appertaining thereto.

(c) Improvements.

Apply to Bank and Corporation Franchise Tax Act.—The terms "real property" and "personal property" as used here and in the Bank and Corporation Franchise Tax Act have the same meaning. San Diego Trust & Savings Bank v. San Diego County, 16 Cal.2d 142; Jameson Petroleum Co. v. State, 11 Cal.App.2d 677.

Public lands.—When occupants or claimants of public lands of the United States have done everything required of them, the land is subject to taxation, even though no patent has been issued. People v. Shearer, 30 Cal. 645.

Under federal law.—What constitutes real property for taxation purposes, within the meaning of federal law, as well as the State Constitution, is determinable by the law of this State if there is reasonable basis for the determination and no discrimination against federal instrumentalities. Trabue Pittman Corp. v. Los Angeles County, 29 Cal.2d 385.

Conflicts with other definitions.—For purposes of taxation, the definitions of real property in the revenue and taxation laws of the state control irrespective of whether they conform to definitions used for other purposes. Trabue Pittman Corp. v. Los Angeles County, 29 Cal.2d 385.

Equitable title.—A taxpayer who has contracted to purchase realty from the United States, conditioned upon conveyance of clear title, and who is in temporary possession pending clearance of a clouded title and conveyance, does not have equitable title to the property and may not be assessed for the fee interest. Parr-Richmond Industrial Corporation v. Boyd, 43 Cal.2d 157.

Water rights.—Water rights become taxable when they are a pre-emptive right, notwithstanding that no appropriation has been made of the water represented by such rights, since the mere right to take water is a property right and is taxable as such. Tuolumne County v. State Board of Equalization, 206 Cal.App.2d 352.

Transferable development rights.—The sort of property in land that is taxable is not limited to the title in fee but is sufficiently comprehensive to include any usufructuary interest. Whether or not such rights, which allow a purchaser, in developing its property, to exceed the maximum floor area ratio otherwise allowed under a city redevelopment plan, are actually embodied within the definition of air rights, which are classified under "land" in property tax rule 124 or represent something entirely separate, they are appropriately viewed as one of the fractional interests in the complex bundle of rights arising from the ownership of land. Mitsui Fudosan (U.S.A.), Inc. v. Los Angeles County, 219 Cal.App.3d 525.

Oil and gas rights.—The possessory interest of the operator under an oil and gas lease, but not the retained royalty interest of the government, constitutes real property for purposes of taxation. The "working interest" of the government, however, in a "unit contract" for a pressurized oil field constitutes real property under this section. Atlantic Oil Co. v. Los Angeles County, 69 Cal.2d 585.

Back to top


105. "Improvements." "Improvements" includes:

(a) All buildings, structures, fixtures, and fences erected on or affixed to the land.

(b) All fruit, nut bearing, or ornamental trees and vines, not of natural growth, and not exempt from taxation, except date palms under eight years of age.

History.—Stats. 1943, p. 1344, in effect August 4, 1943, deleted "Alfalfa, after the first year's planting" from the definition of "improvements." Stats. 1977, Ch. 539, in effect January 1, 1978, deleted ", except telephone and telegraph lines." from subdivision (a).

Improvements.—The term "improvements" is much more comprehensive than "fixtures", and while it includes fixtures it includes also many things that may not be classified as fixtures. Security Data, Inc. v. Contra Costa County, 145 Cal.App.3d 108.

Fixtures.—In determining whether articles constitute fixtures, and therefore improvements, within the meaning of this section, the determining factor is whether there was an intention to make a permanent accession to the real property as reasonably manifested by outward appearances. Neither the status of the party by whom the articles have been installed, nor the length of the lease under which the party is in possession of the real property, is controlling. The fact that the fixtures are removable pursuant to express or implied contract between the landlord and tenant does not necessarily negative the element of permanence, nor is the contract binding upon the taxing authorities. Trabue Pittman Corp. v. Los Angeles County, 29 Cal.2d 385; Simms v. Los Angeles County, 35 Cal.2d 303. In determining whether an article is a fixture, there are three tests: the manner of its annexation, its adaptability to the use and purpose for which the realty is used, and the intention of the party making the annexation. The manner of annexation and the use to which the realty is put are relevant in determining the crucial element of intention to make the article a permanent part of the realty. Great expense or difficulty in removal are indicative of intended permanence. Morse Signal Devices v. Los Angeles County, 161 Cal.App.3d 570; Allstate Insurance Co. v. Los Angeles County, 161 Cal.App.3d 877; Security Pacific National Bank v. Los Angeles County, 161 Cal.App.3d 877; Crocker National Bank v. City and County of San Francisco, 49 Cal.3d 881.

The central office equipment of a telephone company installed in a building owned by the company and especially designed for its use constitutes an improvement. This includes such items as headsets, operators' stools, etc., which, although readily detachable, are usable only with the attached items with which they constitute a single unit. The equipment located in small leased offices is not to be regarded as improvements, notwithstanding the attachment of switchboard legs and equipment to floors or walls by screws or bolts. The exemption of telephone and telegraph lines from the definition of improvements in this section has reference only to the lines outside the central office buildings. Southern California Telephone Co. v. State Board of Equalization, 12 Cal.2d 127.

Bank vaults and vault doors, including those installed by lessees, have been held to constitute improvements. San Diego Trust & Savings Bank v. San Diego County, 16 Cal.2d 142; Trabue Pittman Corp. v. Los Angeles County, 29 Cal.2d 385. Similarly, tellers' cages, partitions, coupon booths and counters installed by a lessee bank have been held to be improvements taxable to the owner of the building in which they were installed. Trabue Pittman Corp. v. Los Angeles County, supra.

Where bank safe-deposit boxes are not physically attached to the building by any means and were readily removable within the vault room and from one branch office of a bank to another, they are not improvements and cannot be taxed as real property. United States National Bank of San Diego v. Los Angeles County, 234 Cal.App.2d 195.

The classification of a bank's fixtures as improvements when similar property of others was intentionally and deliberately misclassified as personalty did not invalidate general county and city taxes but did invalidate special assessment district charges levied only upon realty and which, accordingly, resulted in the imposition of an unequal burden on the bank's property. Simms v. Los Angeles County, 35 Cal.2d 303.

The lessor's right under a lease to remove shipyard facilities does not fix their status as personalty for tax purposes and preclude the assessor from classifying the property as improvements to realty in accordance with the physical facts of their annexation to the land. Kaiser Co., Inc. v. Reid, 30 Cal.2d 610.

Bank owned electronic computer systems are fixtures where special design of a building and system are interrelated, it is difficult and expensive to remove the system, and the system is physically connected to the property by many wires. Bank of America v. Los Angeles County, 224 Cal.App.2d 108. Computer components owned by bank and placed in bank's building were not fixtures but personalty where the building was a general purpose office building, the components were not essential to the purpose for which the building was constructed and used, and their location and use in the building were not materially associated with that purpose; where it was never intended that the bank and the components would remain in the building permanently; where each of the components was mounted on wheels and could readily be unplugged and moved without substantially disturbing the computer room; where the entire system was moved out of the building without substantial difficulty, expense, or time; and where the components were not "destroyed" when they were moved. Security Data, Inc. v. Contra Costa County, 145 Cal.App.3d 108. Standardized, general purpose computers and components, placed in general purpose office buildings, and connected to a power source by means of standardized plugs, and to each other by means of standardized cables, are personal property regardless of whether or not their use is essential to operation of the business in which they are employed. Minor structural alterations to the realty, such as movable partitions or flooring, supplemental air conditioning units, and 220 volts wiring do not alter the character of such property from personalty to reality. Security Pacific National Bank v. Los Angeles County, 161 Cal.App.3d 877. Bank electronic data processing equipment not physically attached to the building by permanent connections but merely by standardized "quick-disconnect" plugs inserted into the power source was not a fixture but personalty where neither the equipment nor the building was designed or modified for each other, and those factors showing a lack of annexation and adaptability were not outweighed by other objective manifestations of permanence, i.e., the interrelation between the purpose and structural form of the building and the capacity and physical characteristics of the equipment, and the equipment's weight and size. Crocker National Bank v. City and County of San Francisco, 49 Cal.3d 881.

Pipe lines underlying public streets (City of Pasadena v. Los Angeles County, 182 Cal. 171), and fences along a railroad right of way (Santa Clara County v. Southern Pacific Co., 118 U.S. 394) are improvements.

A sign and a night depository constituting trade fixtures, owned by a bank and installed on a leased premises were properly classified as improvements under this section and real property under section 104 even though assessed to the lessee and placed on the unsecured roll. Ventura County v. Channel Islands State Bank, 251 Cal.App.2d 240.

A permanently affixed interior household connection to a cable television system installed by the system owner who neither owns nor controls the connection constitutes a fixture and is assessable to the owner of the realty rather than to the system owner. Tele-Vue Systems, Inc. v. Contra Costa County, 25 Cal.App.3d 340. Minor components of installed burglar alarm systems were taxable to the installer, even though they were fixtures permanently attached to subscribers' premises, where the installer owned or controlled them and also owned the major components of the system. Morse Signal Devices v. Los Angeles County, 161 Cal.App.3d 570.

An electric transmission line and substation constructed for, and leased to a tax-exempt utility district with an option to purchase, where possession, control and risk of loss were in the district constituted improvements to the district's real property and were not assessable to the contractor whose interest in the improvements was non-possessory. Collins Electrical Co. v. Shasta County, 24 Cal.App.3d 864.

Where items which might otherwise be classified as personalty are attached to and designed for use in conjunction with items which are fixtures, the entire unit is deemed to be a fixture. Allstate Insurance Co. v. Los Angeles County, 161 Cal.App.3d 877; Security Pacific National Bank v. Los Angeles County, 161 Cal.App.3d 877.

A movable IBM data processing unit, five feet high, sixfeet long and two feet eight inches wide, mounted on wheels and connected to the bank building only by an electrical cable that plugs into a wall socket, was properly classified as personal property and not a fixture. Exchange Bank v. Sonoma County, 59 Cal.App.3d 608.

Constructive annexation.—"Constructive annexation" and "unit for use", as applied to property taxes and whereunder an item placed on real property, but not physically fastened or otherwise attached to it, may be deemed "constructively annexed" to it and therefore part of the fixture if the item is used in such a way that it constitutes a "unit for use" with another item which is a fixture, are applicable only in instances in which the use of the nonattached item is significantly associated with the purpose for which the building in question is used. Security Data, Inc. v. Contra Costa County, 145 Cal.App.3d 108.

Levees and fills.—The levees of a canal (Kern Valley Water Co. v. Kern County, 137 Cal. 511) and an earthen tideland fill (San Pedro etc. R. R. Co. v. City of Los Angeles, 180 Cal. 18) do not constitute improvements.

Canals.—A concrete lined canal is an improvement. San Francisco v. San Mateo County, 17 Cal.2d 814.

Vines.—Strawberry plants are not vines. Monterey County v. Madolora, 171 Cal.App.2d 840.

Converted vessels.—The use of the special wharf area, developed as a tourist attraction by the city, manifested the intent to make the Queen Mary a permanent addition to realty. Specialty Restaurants Corporation v. Los Angeles County, 67 Cal.App.3d 924.

Note.—See note under Constitutional Provisions, Art. XIII, § 27, entitled "Taxation of bank safe deposit boxes."

Back to top


106. "Personal property." "Personal property" includes all property except real estate.

Well equipment.—The physical merchandise constituting an oil well (casing) must be separately listed as personal property. Birch v. Orange County, 59 Cal.App. 133. However, see California Domestic Water Co. v. Los Angeles County, 10 Cal.App. 185, holding that wells, pumping machinery and pipe lines on water-bearing lands, together with such lands, constitute real estate.

107. "Possessory interests." "Possessory interests" means the following:

(a) Possession of, claim to, or right to the possession of land or improvements that is independent, durable, and exclusive of rights held by others in the property, except when coupled with ownership of the land or improvements in the same person. For the purpose of this subdivision:

(1) "Independent" means the ability to exercise authority and exert control over the management or operation of the property or improvements, separate and apart from the policies, statutes, ordinances, rules, and regulations of the public owner of the property or improvements. A possession or use is independent if the possession or operation of the property is sufficiently autonomous to constitute more than a mere agency.

(2) "Durable" means for a determinable period with a reasonable certainty that the use, possession, or claim with respect to the property or improvements will continue for that period.

(3) "Exclusive" means the enjoyment of a beneficial use of land or improvements, together with the ability to exclude from occupancy by means of legal process others who may interfere with that enjoyment. For purposes of this paragraph, "exclusive use" includes the following types of use in property:

(A) Sole occupancy or use of property or improvements.

(B) Use as a cotenant.

(C) Concurrent use by a person who has a primary or prevailing right to use property or improvements at any time.

(D) Concurrent uses by persons making qualitatively different uses of property or improvements.

(E) Concurrent use by persons engaged in similar uses that diminish the quantity or quality of the property or improvements.

(F) Concurrent use that does not diminish the quantity or quality of the property or improvements, if the number of those concurrent use grants is restricted.

A use of property or improvements that does not contain one of the elements in subparagraphs (A) to (F), inclusive, shall be rebuttably presumed to be a nonexclusive use.

(b) Taxable improvements on tax-exempt land.

Any possessory interest may, in the discretion of the county board of supervisors, be considered as sufficient security for the payment of any taxes levied thereon and may be placed on the secured roll.

Leasehold estates for the production of gas, petroleum and other hydrocarbon substances from beneath the surface of the earth, and other rights relating to these substances which constitute incorporeal hereditaments or profits a prendre, are sufficient security for the payment of taxes levied thereon. These estates and rights shall not be classified as possessory interests, but shall be placed on the secured roll.

If the tax on any possessory interest or leasehold estate for the production of gas, petroleum and other hydrocarbon substances is unpaid when any installment of secured taxes become delinquent, the tax collector may use those collection procedures which are available for the collection of assessments on the unsecured roll.

If the tax on any possessory interest or leasehold estate for the production of gas, petroleum and other hydrocarbon substances remains unpaid at the time set for the declaration of default for taxes carried on the secured roll, the possessory interest tax together with any penalty and costs which may be accrued thereon while on the secured roll shall be transferred to the unsecured roll.

History.—Stats. 1941, p. 409, operative February 1, 1941, substituted last portion of (a) beginning with "coupled" for words "resulting from ownership of the land or improvements." Stats. 1943, p. 3078, in effect August 4, 1943, added provisions relating to oil and gas leases. Stats. 1957, p. 1968, in effect September 11, 1957, substituted "three years" for "one year" in next to last sentence. Stats. 1972, p. 2608, in effect March 7, 1973, authorized the board of supervisors in counties having a population of 4,000,000 or more, in its discretion, to consider possessory interests as sufficient security for payment of property taxes thereon and to place them on the secured roll; and specified collection procedures with respect to unpaid taxes on possessory interests. Stats. 1978, Ch. 576, in effect August 31, 1978, added the phrase in the second paragraph of subdivision (b) beginning with the words "and for the 1978–79" and ending with the words "Section 2237.". Stats. 1979, Ch. 4, in effect February 28, 1979, deleted second sentence of second paragraph of subdivision (b) limiting its application to counties of more than 4,000,000 population. Stats. 1980, Ch. 411, in effect July 11, 1980, operative January 1, 1981, substituted "Any" for "All" at the beginning of the second paragraph; and substituted "any" for "the last" after "when", and "may" for "shall" in the fourth paragraph; and substituted "any" for "such" in the last paragraph of subdivision (b). Stats. 1985, Ch. 316, effective January 1, 1986, substituted "these" for "such" after "other rights relating to" in the first sentence and before "estates" in the second sentence of the third paragraph; and substituted "declaration of default" for "sale to the state" after "the" and substituted "the" for "such" after "taxes carried on the secured roll" in the fifth paragraph. Stats. 1995, Ch. 498, in effect January 1, 1996, added "that is . . . the property" after "improvements,", in the first sentence of subdivision (a); added second sentence in subdivision (a), including paragraphs (1), (2), and (3) and subparagraphs (A) through (F) of paragraph (3); and added third sentence in subdivision (a). Stats. 1996, Ch. 171, in effect July 17, 1996, substituted "possession" for "possessor" after "if the" in paragraph (1) of subdivision (a).

Note.—The distinction between "possessory interests" and other "real estate" is important because under this section and Section 109 an assessment of the former is to be entered on the unsecured roll if the owner does not own other real property in the same county sufficient to secure the payment of the taxes on the possessory interests under Section 2190. Under Sections 2901, 2903, and 2951 taxes on property on the unsecured roll are due immediately on assessment and may be collected by the assessor by seizure and sale of the property.

Construction.—Possessory interests taxable under this section include privately held possessory interests in property owned by the federal, state, or municipal government, since the use is private rather than public. However, the governmental entity does not lose its tax exemption by leasing its land. The reversion is not taxed, for it is only the value of the use for the unexpired term of the lease that is assessed. This rule applies to property owned by public schools and colleges. Connolly v. Orange County, 1 Cal.4th 1105.

Leaseholds.—A leasehold estate carries a right to the possession of land, and therefore constitutes real property for purposes of taxation. Although ordinarily a leasehold is taxed to the owner of the reversionary interest, the value of the lessee's estate being treated as a constituent part of the valuation of the freehold, where the reversion is publicly owned and therefore tax exempt, a separate assessment of the leasehold to the lessee may be had. San Pedro, etc. R. R. Co. v. City of Los Angeles, 180 Cal. 18; Hammond Lumber Co. v. Los Angeles County, 104 Cal.App. 235; Hammond Lumber Co. v. City of Los Angeles, 12 Cal.App.2d 277. A separate assessment of the possessory interest in leased public lands to a sublessee in possession is valid. Tilden v. Orange County, 89 Cal.App.2d 586.

A lessee of publicly owned property need not have absolute control over the property possessed to constitute an "independent" use. If the possessor exercises sufficient authority and control over the property possessed, it may be required to pay property taxes even if it shares possession with the government entity. Korean Air Lines Co., Ltd. v. County of Los Angeles, 162 Cal.App.4th 552.

A Chinese state-owned air carrier's leasehold possessory interests and landing rights at airport were properly taxed by the county under Revenue and Taxation Code Sections 107 and 107.9. Imposition of property taxes was not prohibited by tax treaty because treaty created exemption only for income taxes. Taxes on leasehold and possessory interests are not contrary to U.S. Internal Revenue Code or the Chicago Convention on Civil Aviation, where they were not a tax on gross income, but actually a property tax. Air China Limited v. County of San Mateo, 174 Cal.App.4th 14.

The peculiar characteristics of an oil lease also justify a separate assessment of a leasehold. After the discovery of oil, the value of the lessor's interest is much less than it would be if he had the entire estate. The lessee has no right to the usufruct of the soil, but does have the right to extract a certain part of the substance of the land itself. Graciosa Oil Co. v. Santa Barbara County, 155 Cal. 140.

As a result of the 1943 amendment to this section, the interest of a lessee under an oil and gas lease is subject to the tax rate for the current year rather than for the preceding year. As so construed the amendment does not violate former Article XIII, Section 9a, of the Constitution. Delaney v. Lowery, 25 Cal.2d 561; Hoyt v. Woody, 25 Cal.2d 947. Collection procedures, however, follow those for unsecured taxes, i.e., by seizure and sale or against the personal liability of the assessee. Picchi v. Montgomery, 261 Cal.App.2d 246.

A shipbuilding corporation having a right under contracts with the United States Maritime Commission to the exclusive use and possession as an independent contractor, of the land and facilities of a shipyard owned by the United States and the shipbuilding facilities owned by the United States in another shipyard is a lessee of the property and its possessory interest therein is taxable. Kaiser Co., Inc. v. Reid, 30 Cal.2d 610. See also Parr-Richmond Industrial Corp. v. Boyd, 43 Cal.2d 157.

A "drilling and operating agreement" granting the exclusive right to drill for oil and gas for a term of years, and providing that the driller be reimbursed for his costs from the proceeds of sale, that title to the oil and gas produced remain in the landowner until paid for and that the driller have the exclusive right and be required to purchase all of the product, vests in the driller a taxable incorporeal hereditament or profit a prendre. Los Angeles County v. Continental Corp., 113 Cal.App.2d 207.

Amortization and rental provisions which leave the lessee without equity in a garage operated by a nonprofit corporation under a lease from a city are not to be considered in valuation of the leasehold interest in the garage for tax purposes. Stamps v. Board of Supervisors, 233 Cal.App.2d 256.

A city may covenant by lease to pay the taxes for its lessee so long as the consideration was paid for a public purpose such as the public parking facility in question. Cane v. City and County of San Francisco, 78 Cal.App.3d 654.

A possessory interest acquired by a contractor under a lease from a city was retained upon the leaseback of the property to the city. Possession by the city under the sublease was not in opposition to but pursuant to and subordinate to the contractor's right. City of Desert Hot Springs v. Riverside County, 91 Cal.App.3d 441. A tenant's month-to-month tenancy was properly treated as a durable possessory interest in the property even though his lease could be terminated, as the tenant had possessed the property for several years. Although the possessory interest had no stated term of possession, the tenant had the same right to continued possession as any tenant who interest is subject to termination or renewal. Therefore, value could be ascribed to the expectation of continued possession of the property by the tenant. Silveira v. County of Alameda, 139 Cal.App.4th 989.

A car rental agency leased space at county-owned airport. Under its lease, the car rental agency had rights to an area that members of the public clearly did not share, but which it did share with six other lessees in a fashion that restricted neither the quantity of the property nor the quality of its use. The car rental agency's rights under its lease were sufficiently exclusive to establish its possessory interest and permit taxation. Vanguard Car Rental USA, Inc. v. County of San Mateo (2010) 181 Cal. App. 4th 1316.

Treaties.—A Chinese state-owned air carrier's leasehold possessory interests and landing rights at airport were properly taxed by the county under Revenue and Taxation Code Sections 107 and 107.9. Imposition of property taxes was not prohibited by tax treaty because treaty created exemption only for income taxes. Air China Limited v. County of San Mateo, 174 Cal.App.4th 14.

Government lands.—The possessory interest of an occupant or claimant of public lands of the State or of the United States is taxable, although no part of the purchase price has been paid. People v. Donnelly, 58 Cal. 144; People v. Shearer, 30 Cal. 645. A tax against the land itself is void. Gottstein v. Adams, 202 Cal. 581; City of Los Angeles v. Board of Supervisors, 108 Cal.App. 655. A holder of a certificate of purchase of lieu lands who has never been in possession or claimed the right of possession is not taxable thereon. The term "claim to land" contemplates an actual possession of the land claimed. Slade v. Butte County, 14 Cal.App. 453.

In an action brought by a county to collect unsecured property taxes levied against a leasehold in land leased by the United States to defendant for construction of family dwelling units for military and civilian personnel under a federal statute consenting to local taxation with a deduction therefrom for payments made by the United States in lieu of taxes, although the outcome would not directly affect the pecuniary interest of the United States, the government may intervene because it does have an interest in sustaining its fiscal policy. San Bernardino County v. Harsh California Corp., 52 Cal.2d 341.

The exclusive right to the use of a house furnished by a tax exempt irrigation district to its employee on a month-to-month basis was a taxable possessory interest even though the right was terminable with the termination of employment. McCaslin v. DeCamp, 248 Cal.App.2d 13. An operator of a restaurant at a municipal golf course was held to have a taxable interest where his possession was marked by independence, durability and exclusiveness even though the basis of his rights was a contract rather than a lease. Mattson v. Contra Costa County, 258 Cal.App.2d 205.

A shipping company using a city's marine terminals under a "Preferential Assignment Agreement" had a taxable possessory interest where the agreement gave the company exclusive possession against all the world, including the city, whenever it had a "business need" for the premises, where the company had continuously used and had a business need to use all of the premises, and where analysis of the entire agreement established that it was comparable to a lease. Sea-Land Service, Inc. v. Alameda County, 36 Cal.App.3d 837. Vessel owner's contractual right to use publicly owned maritime facilities may be a possessory interest in real property that is subject to taxation, even though the right is concurrent with the rights of others and subject to restrictions on right of use. Exclusive use is not destroyed by concurrent use when the extent of each party's use is limited by the other party's right to use the property at the same time. And possible interference with use affects value, but not the existence of a possessory right. Possible interference with use affects value, but not existence of a possessory right. Euro-Pacific v. Alameda County, 11 Cal.App.4th 891. For taxable possessory interest purposes, "independence" exists if the possessor exercises sufficient authority and control over the property possessed, as opposed to being in a mere agency relationship with the government landlord, and "absolute control" is not necessary. Korean Air Lines Co., Ltd. v. County of Los Angeles, 162 Cal.App.4th 552.

Possessory interests in improvements to real property are dependent for existence on real property, which in the case of a vessel can include areas aboard the vessel, the real property upon which the vessel lies, and parking areas, and an assessment of taxable possessory interests must necessarily include the value of the supporting land. Specialty Restaurants Corporation v. Los Angeles County, 111 Cal.App.3d 607.

A nonprofit corporation organized for the purpose of managing exempt, state-owned property does not acquire a taxable possessory interest in the property where a principal-agent relationship exists, where the corporation is under state control and holds the property for the public benefit, and where possession by the corporation is not so exclusive as to amount to such an interest. In determining whether a possessory interest is taxable, the factors of exclusiveness, independence, durability and private benefit are weighted on a case-by-case basis. Pacific Grove-Asilomar Operating Corp. v. Monterey County, 43 Cal.App.3d 675.

Occupancy of dwelling units in national forests by U.S. Forest Service employees, which consisted of nontransferable rights of possession, terminable at the will of the federal government, together with other restrictions, results in a taxable possessory interest, the value of which must be subject to the restrictive factors. The assessment is not made against the federal government but against the usufructuary interest of the employees in the units. United States v. Fresno County, 50 Cal.App.3d 633, 429 U.S. 452.

Occupancy of dwelling units on base and off base by military personnel, being neither durable nor private, does not result in a taxable possessory interest. Even if it did result in a possessory interest, any resultant tax imposed would be constitutionally impermissible as a tax imposed upon federal functions and properties. United States v. Humboldt County, 628 F.2d 549.

Government property affixed to realty.—The right of a nonprofit corporation to use government property permanently affixed to the realty is exclusive and, hence, a taxable possessory interest. Although such right is pursuant to a yearly contract, the corporation pays no rent and cannot transfer its right without consent and the government can cancel the contract and remove the property. Since possessory interests in improvements to real property are defined as real property in sections 104 and 105 of the Revenue and Taxation Code, they are taxable as such under Cal. Const. Art. XIII, Sec. 1, although no specific statute imposes a tax on possessory interests. A provision in a contract pursuant to a government regulation that property does not lose its identity as personalty by reason of affixation to the realty does not preclude the state from classifying government property as improvements to real property for taxation purposes. Rand Corp. v. Los Angeles County, 241 Cal.App.2d 585.

Lease of grazing land.—In assessing the possessory interest of a lessee of tax-exempt land leased for grazing purposes, it is proper to capitalize the rent for the total number of years of the lease and renewal options. Natural grasses on the land, which do not require annual or seasonal planting, are not exempt from taxation as growing crops. El Tejon Cattle Co. v. San Diego County, 64 Cal.2d 428.

Mining claims.—The possessory right to a mining claim subject to a lease is taxable as a possessory interest. Bakersfield & Fresno Oil Co. v. Kern County, 144 Cal. 148.

Mineral rights.—Under Section 104 an owner's interest in fee to coal or mineral rights may be classified either as "ownership of" a portion of the land or as "minerals." It is certainly more than "the possession of, claim to, or right to the possession of land." Merchants Trust Co. v. Hopkins, 103 Cal.App. 473.

Statute of limitations.—Actions under this section are controlled by the three-year period of limitations prescribed by Section 338(1) of the Code of Civil Procedure. The period commences to run at the date of delinquency. Los Angeles County v. Continental Corp., 113 Cal.App.2d 207.

The limitation on seizure and sale for delinquency is mandatory, not merely directory, and a tax sale after such period is void. Lieb v. Day, 130 Cal.App.2d 376.

Personal property.—The legislature has not defined personal property as including a right to its possession as it has real property. General Dynamics Corp. v. Los Angeles County, 51 Cal.2d 59.

Fixtures.—Exclusive use of two 750 ton cargo cranes, mounted on rails specially installed on the wharf, constitutes a taxable possessory interest. The cranes were properly classified as fixtures since they were intended to be a permanent part of the wharf. Seatrain Terminals of California, Inc. v. Alameda County, 83 Cal.App.3d 69.

A federal contractor had a possessory interest in a government-owned experimental fusion devise, which was properly classified as an improvement, and was not immune from ad valorem taxation under the supremacy clause of the United States Constitution. United States v. San Diego County, 965 F.2d 691.

Exclusive, independent, and durable interest in experimental fusion device owned by the United States constitutes a taxable possessory interest. The device was properly classified as a fixture where it weighed more than 400 tons, it was annexed to the underlying land by gravity, and the land had been modified to accommodate it. United States v. San Diego County, 53 F.3d 965.

Leasehold interest in Indian lands.—The imposition of a nondiscriminatory tax on the possessory interest of a lessee in Indian land held in trust by the federal government did not impose an undue burden on commerce with the Indians in violation of the federal Constitution, nor was it a tax directly on federal property. Palm Springs Spa, Inc. v. Riverside County, 18 Cal.App.3d 372.

A federal court refused to enjoin the imposition of a tax on the possessory interest held by lessees of Indian land holding that the tax was on the lessee's interest in the land and not on the Indians' land. The mere fact that the tax increased the financial burden on the Indians in the form of reduced rents did not vitiate the tax. Agua Caliente Band of Mission Indians v. Riverside County, 442 F.2d 1184, cert. denied 405 U.S. 933.

The imposition of a taxable possessory interest on non-Indian lessees of reservation land is not violative of the Indian Reorganization Act. Fort Mojave Tribe v. San Bernardino County, 543 F.2d 1253, cert. den. 430 U.S. 983.

An ad valorem tax lien on plaintiff's possessory interest in tax-exempt Indian land was not eliminated by the nonjudicial foreclosure sale of the previous owner's possessory interest by a senior lienholder, where the lien was placed on the property before the sale and the senior lienholder was aware of it and agreed to pay it but failed to do so. Thus, the property was subject to seizure and sale for delinquent taxes under this section and Section 2951. Barer v. Riverside County, 57 Cal.App.4th 558.

Federal contractor.—A federal contractor's possessory interest in experimental fusion device owned by the United States sufficiently distinguished contractor from the government, so that tax imposed on contractor was not tax on United States in violation of Supremacy Clause. United States v. San Diego County, 965 F.2d 691. It is not unconstitutional for a county to calculate the value of a taxpayer's possessory interest in an experimental fusion device by using the value of the device. United States v. San Diego County, 53 F.3d 965.

Federal grazing permits and agricultural leases.—During the term of a federal grazing permit the permittees have possession and valuable use of the land allowing them to graze their cattle on public land and thereby contribute to the growth and profitability of their enterprises. In view of the valuable interests in land conferred by the documents the court held that grazing permits as well as agricultural leases gave rise to taxable possessory interests. Board of Supervisors v. Archer, 18 Cal.App.3d 717.

The recurrent character of federal grazing permits issued subsequent to the tax lien date supports the existence of a taxable possessory interest. Dressler v. Alpine County, 64 Cal.App.3d 557.

Forest Service timber sales contracts.—The interest of timber operators created by a contract with the U.S. Forest Service whereby the timber operators obtain a present right in the standing timber and the right to go upon the federal land to harvest the timber constitutes a taxable possessory interest. There is no rule under California law that a vendee under a land sale has no taxable interest until the sale is completed. Georgia-Pacific Corporation v. Mendocino County; International Paper Company v. Siskiyou County, 340 F.Supp. 1061; 357 F.Supp. 380; 515 F.2d 285.

Non-taxable use of tax-exempt property.—Although not a basis for its decision in the case, a court indicated that the interest of an occupant in a retirement home exempt from property taxation pursuant to Revenue and Taxation Code section 214 did not constitute a taxable possessory interest in the tax exempt premises since the occupants were using the property for a non-taxable purpose. John Tennant Memorial Homes, Inc. v. City of Pacific Grove, 27 Cal.App.3d 372.

Failure to assess all possessory interests does not invalidate those assessed.—Plaintiff, holder of a preferential assignment in city harbor property, contended that assessment of the assignment (a possessory interest) was discriminatory because similar interests of others had not been assessed. Court held there was no discrimination; the other interests were different, some assessments had not been made pending outcome of plaintiff's suit, and, in general, discrepancies arising from assessor's mistake or lack of information which result in some assessments not being made are not grounds for declaring all other assessments invalid. Metropolitan Stevedore Co. v. Los Angeles County, 29 Cal.App.3d 565.

Concessionaire agreements.—The provision of television receivers for rental to patients at a county hospital except for two wards equipped with the hospital's own sets constitutes a taxable possessory interest. The test is not exclusive possession against all the world, including the owner. If the right of possession must be shared to some extent, it is to be considered in fixing the value but does not destroy the existence of the possessory interest. Wells National Services Corporation v. Santa Clara County, 54 Cal.App.3d 579.

A coliseum and sports arena food and beverage concessionaire meets the requirement of exclusiveness and is therefore subject to a taxable possessory interest. Under property tax rule 21(e)(2) the interest of the concessionaire qualifies as a concurrent use. Stadium Concessions, Inc. v. City of Los Angeles, 60 Cal.App.3d 215. A stadium food and beverage concessionaire is subject to a taxable possessory interest, the value of which does not include enterprise value as distinguished from the value of its use of the property under agreement with the stadium owner. Service America Corporation v. San Diego County, 15 Cal.App.4th 1232.

Franchise agreements.—The interests of a cable television distribution company in franchise agreements granting the company the right to use and occupy public rights of way for the purpose of distributing its service are property subject to property taxation since the company's use of the public rights of way constitutes a taxable possessory interest. A possessory interest may be the interest of either an easement holder or a mere permittee or licensee. Cox Cable San Diego, Inc. v. San Diego County, 185 Cal.App.3d 368; Shubat v. Sutter County Assessment Appeals Board, 13 Cal.App.4th 794. A county assessment appeals board erred in ruling that a cable television company's entire franchises, which consist of two components, the right to use public streets to lay cables and the right to charge a fee to subscribers for their use of cable facilities, were nontaxable intangibles. Both the California Constitution and statutes mandate that all property must be taxed if not exempt under federal or state law, and under applicable case law the right to use public rights-of-way is an assessable possessory interest in real property. Stanislaus County v. Assessment Appeals Board, 213 Cal.App.3d 1445; Shubat v. Sutter County Assessment Appeals Board, 13 Cal.App.4th 794.

Commercial use.—The exclusive and profitable use of public property for commercial rafting by a commercial rafting company constitutes a taxable possessory interest. The tax is on the company's use of the water, and the right to use water is a valuable property right upon which a possessory interest tax may be levied. Scott-Free River Expeditions, Inc. v. El Dorado County, 203 Cal.App.3d 896. The purpose of this section is to protect the public domain from private profit without tax liability. And use by commercial air passenger carriers of an international airport was business use and sufficiently exclusive as to qualify as a taxable possessory interest, even though the general aviation public had concurrent landing rights. United Air Lines, Inc. v. San Diego County, 1 Cal.App.4th 418. The possession or use which grounds possessory interests means and requires not just some benefit from the public property, but physical possession or use of it. Thus, the county assessment appeals board was correct in limiting taxable possessory interest assessments of several car rental firms at county airports to their counters and reserved parking lots rather than on their "use" of the airports as a whole. Further rights granted by the airports, to do business at the airports and their environs, were not possessory interests but were intangibles not subject to property tax. Los Angeles County v. Los Angeles County Assessment Appeals Board No. 1, 13 Cal.App.4th 102.

The owner of amusement machines placed for private profit in public facilities, including an airport terminal, meets the requirement of exclusiveness, and is therefore subject to a taxable possessory interest. Despite the small size and variable location of the space occupied by each machine, the owner had a special right of access for profit not shared in common by all who entered such facilities, and such space was not by its size or movement made unvaluable to the owner. Freeman v. Fresno County, 126 Cal.App.3d 459.

Short-term users of a city's facilities obtained taxable possessory interests in the facilities when they obtained use permits on more than one occasion. Two-time uses of the facilities meet the criteria of durability, independence, and exclusivity necessary to constitute possessory interests. And the agreement between the city and the users accorded sufficient control to the users to meet the criterion of independent possession. City of San Jose v. Carlson, 57 Cal.App.4th 1348.

Commercial Use.—The use of a space for a profit-making enterprise or other private benefit is an integral factor in establishing "independence." Korean Air Lines Co., Ltd. v. County of Los Angeles, 162 Cal.App.4th 552.

Term of possession.—A tenant's month-to-month tenancy was properly treated as a durable possessory interest in the property even though his lease could be terminated, as the tenant had possessed the property for several years. Although the possessory interest had no stated term of possession, the tenant had the same right to continued possession as any tenant who interest is subject to termination or renewal. Therefore, value could be ascribed to the expectation of continued possession of the property by the tenant. Silveira v. County of Alameda, 139 Cal.App.4th 989.

Month-to-month tenancy.—A tenant's month-to-month tenancy was properly treated as a durable possessory interest in the property even though his lease could be terminated, as the tenant had possessed the property for several years. Although the possessory interest had no stated term of possession, the tenant had the same right to continued possession as any tenant who interest is subject to termination or renewal. Therefore, value could be ascribed to the expectation of continued possession of the property by the tenant. Silveira v. County of Alameda, 139 Cal.App.4th 989.

Back to top


107.1. Valuation of certain possessory interests. The full cash value of a possessory interest, when arising out of a lease of exempt property, is the excess, if any, of the value of the lease on the open market, as determined by the formula contained in the case of De Luz Homes, Inc. v. County of San Diego (1955), 45 Cal.2d 546, over the present worth of the rentals under said lease for the unexpired term thereof.

A possessory interest taxable under the provisions of this section shall be assessed to the lessee on the same basis or percentage of valuation employed as to other tangible property on the same roll.

This section applies only to possessory interests created prior to the date on which the decision of the California Supreme court in De Luz Homes, Inc. v. County of San Diego (1955), 45 Cal.2d 546, became final. It does not, however, apply to any of such interests created prior to that date that thereafter have been, or may hereafter be, extended or renewed, irrespective of whether the renewal or extension is provided for in the instrument creating the interest.

This section does not apply to leasehold estates for the production of gas, petroleum and other hydrocarbon substances from beneath the surface of the earth, and other rights relating to such substances which constitute incorporeal hereditaments or profits a prendre.

History.—Added by Stats. 1957, p. 3741, in effect September 11, 1957. Stats. 1970, p. 1071, in effect November 23, 1970, deleted paragraph preceding the present first paragraph; substituted "a" for "such" preceding "possessory" in the first paragraph, and added ", when arising out of a lease of exempt property," to the first paragraph.

Construction.—To give this section retrospective effect would be to authorize an unconstitutional gift of public funds. The Texas Co. v. Los Angeles County, 52 Cal.2d 55. Leasehold interests in tax-exempt land are not personal property within the meaning of Section 14 of Article XIII of the State Constitution and that portion of the above section which declares such leasehold interests to be personal property is invalid; however, the remaining provisions of the above section are valid. Forster Shipbldg. Co. v. Los Angeles County, 54 Cal.2d 450.

In computing such full cash value for a given year, deduction of rentals accruing after the assessment date, not rentals accruing after the beginning of the fiscal year, is proper. Host International, Inc. v. San Mateo County, 35 Cal.App.3d 286.

Back to top


107.2. Valuation of certain oil and gas interests. The full cash value of leasehold estates in exempt property for the production of gas, petroleum and other hydrocarbon substances from beneath the surface of the earth, and all other taxable rights to produce gas, petroleum and other hydrocarbon substances from exempt property (all of which rights are hereinafter in this section referred to as "such oil and gas interests"), is the value of such oil and gas interests exclusive of the value of any royalties or other rights to share in production from exempt property owned by any tax-exempt entity, whether receivable in money or property and whether measured by or based upon production or income or both.

This section applies to such oil and gas interests created prior to the date on which the decision in De Luz Homes, Inc. v County of San Diego (1955) 45 Cal.2d 546, became final. This section does not, however, apply to any of such oil and gas interests created prior to such date which have been after such date or are hereafter extended or renewed, unless such extension or renewal is pursuant to authority in a contract, lease, statute, regulation, city charter, ordinance, or other source, which authority permits no reduction of the rate of royalty or other right to share in production on grounds of an increase in the assessed valuation of such oil and gas interest. Moreover, this section does not apply to any of such oil and gas interests if the rate of royalties or other right to share in production has, prior to the effective date of this section, been reduced to adjust for the fact that certain assessors have valued such oil and gas interests without excluding the value of said royalties or other rights to share in production.

History.—Added by Stats. 1967 p. 4218, in effect November 8, 1967.

Construction.—This section and section 107.3 constitute a valid exercise of the Legislature's power to avert hardship caused by a retroactive application of a change in assessment practice. Atlantic Richfield Co. v. Los Angeles County, 68 Cal.App.3d 105. In passing this section and Section 107.3, the Legislature intended that they be applicable to the 1967–68 tax year. Retrospective application of the sections did not constitute an unconstitutional gift of public funds where, although tax liens on the leasehold estates had vested prior to the enactment of the sections, the Legislature reasonably concluded such application would serve a valid public purpose in relieving hardship to taxpayers. Atlantic Richfield Co. v. Los Angeles County, 129 Cal.App.3d 287.

This section does not require a county to reduce the value of oil and gas leaseholds from the federal government by an amount equal to the present value of government royalties due under the leases. While it provides that, for oil and gas interests created prior to the date of De Luz Homes, Inc. v. San Diego County, 45 Cal.2d 546, stating a contrary rule, the full cash value of such leasehold estates excludes the royalties, and while the lessee's interests were created prior to that date, the section also provides that it does not apply to extensions or renewals unless the extension or renewal is pursuant to authority permitting no reduction of the royalty rate. Thus, the Legislature intended the statutory relief to apply to extensions or renewals pursuant to provisions denying the lessee the ability to renegotiate in light of De Luz Homes, Inc. v. San Diego County. There was nothing in the terms of the leases at issue or in the federal statutes that prohibited a reduction in royalty on the ground of an increase in the assessed valuation. Oryx Energy Company v. Kern County, 17 Cal.App.4th 48.

Back to top


107.3. Valuation of certain oil and gas interests; extended. The full cash value of leasehold estates in exempt property for the production of gas, petroleum and other hydrocarbon substances from beneath the surface of the earth and all other taxable rights to produce gas, petroleum and other hydrocarbon substances from exempt property (all of which rights are hereinafter in this section referred to as "such oil and gas interests"), is the value of such oil and gas interests, exclusive of the value of any royalties or other rights to share in production from exempt property owned by any tax- exempt entity, whether receivable in money or property and whether measured by or based upon production or income or both.

This section applies to:

(a) Such oil and gas interests created prior to the date on which the decision in De Luz Homes, Inc. v. County of San Diego (1955) 45 Cal.2d 546, became final to which Section 107.2 of this code does not apply because said interests were extended or renewed on or before July 26, 1963.

(b) Such oil and gas interests created on or after the date on which said decision became final and on or before July 26, 1963.

This section does not, however, apply to any of such oil and gas interests extended or renewed after July 26, 1963, unless such extension or renewal is pursuant to authority in a contract, lease, statute, regulation, city charter, ordinance or other source which authority permits no reduction of the rate of royalty or other right to share in production upon the ground of an increase in the assessed valuation of such oil and gas interest. Moreover, this section does not apply to any of such oil and gas interests if the rate of royalties or other right to share in production has, prior to the effective date of this section, been reduced to adjust for the fact that certain assessors have valued such oil and gas interests without excluding the value of said royalties or other rights to share in production.

History.—Added by Stats. 1967, p. 4218, in effect November 8, 1967.

Back to top


107.4. "Possessory interest." [Repealed by Stats. 1994, Ch. 1222, in effect January 1, 1995.]

107.4. Possessory interest; military housing. (a) For purposes of paragraph (1) of subdivision (a) of Section 107, there is no independent possession or use of land or improvements if that possession or use is pursuant to a contract that includes, but is not limited to, a long-term lease, for the private construction, renovation, rehabilitation, replacement, management, or maintenance of housing for active duty military personnel or their dependents, or both, if all of the following criteria are met:

(1) The military housing constructed and managed by private contractor is situated on a military facility under military control, and the construction of that housing is performed under military guidelines in the same manner as construction that is performed by the military.

(2) All services normally provided by a municipality are required to be purchased from the military facility or a provider designated by the military.

(3) The private contractor is not given the right and ability to exercise any significant authority and control over the management or operation of the military housing, separate and apart from the rules and regulations of the military.

(4) The number of units, the number of bedrooms per unit, and the unit mix are set by the military, and may not be changed by the contractor without prior approval by the military.

(5) Tenants are designated by a military housing agency.

(6) Financing for the project is subject to the approval of the military in its sole discretion.

(7) Rents charged to military personnel or their dependents are set by the military.

(8) The military controls the distribution of revenues from the project to the private contractor, and the private contractor is allowed only a predetermined profit or fee for constructing the military housing.

(9) Evictions from the housing units are subject to the military justice system.

(10) The military prescribes rules and regulations governing the use and occupancy of the property.

(11) The military has the authority to remove or bar persons from the property.

(12) The military may impose access restrictions on the contractor and its tenants.

(13) Any reduction or, if that amount is unknown, the private contractor's reasonable estimate of savings, in property taxes on leased property used for military housing under the Military Housing Privatization Initiative (10 U.S.C. Sec. 2871 et seq.) shall inure solely to the benefit of the residents of the military housing through improvements, such as a child care center provided by the private contractor.

(14) The military family housing is constructed, renovated, rehabilitated, remodeled, replaced, or managed under the Military Housing Privatization Initiative, or any successor to that law.

(b) This section shall not apply to a military housing unit managed by a private contractor that is rented to a tenant who is an unaffiliated member of the general public.

(1) "Unaffiliated member of the general public" means a person who is not a current member of the military. A housing unit rented to or occupied by a person employed as management or maintenance personnel for the military housing property shall not be considered to be a unit rented to an unaffiliated member of the general public.

(2) The private contractor shall annually notify the assessor by February 15 of any housing units rented to unaffiliated members of the general public as of the immediately preceding lien date. The private contractor shall be responsible for any property taxes on housing units rented to unaffiliated members of the general public.

(c) For purposes of this section, "military facility under military control" means a military base that restricts public access to the military base.

History.—Added by Stats. 2004, Ch. 853 (SB 451), in effect January 1, 2005. Stats. 2006, Ch. 251 (SB 1400), in effect January 1, 2007, added subdivision (o). Stats. 2010, Ch. 327 (SB 1250), in effect January 1, 2011, designated the former fist paragraph as subdivision (a) and substituted "or their dependents, or both," for "and their dependents," after "military personnel" in the first sentence therein; designated former subdivisions (a) through (n) as paragraphs (1) through (14), respectively, substituted "military housing" for "military family housing" three times in paragraphs (1), (8), and (14), and substituted "et seq." for "and following" after "Sec. 2871" in paragraph (13) therein; added subdivision (b); and relettered former subdivision (o) as (c).

Note.—Section 1 of Stats. 2004, Ch. 853 (SB 451) provided that the Legislature finds and declares as follows:

(a) The provision of military family housing is a mission of the military, as stated by the United States Department of Defense.

(b) Under the Military Housing Privatization Initiative (MHPI) (10 U.S.C. Sec. 2871 and following), Congress has entrusted private contractors to construct, renovate, replace, or manage military family housing pursuant to extensive guidelines and restrictions imposed by the military.

(c) The military family housing constructed and managed by private contractors pursuant to the MHPI is situated on a military facility under the control of the military.

(d) A private contractor who constructs, renovates, replaces, or manages military family housing pursuant to the MHPI has neither the right nor the ability to exercise independent authority and control over the day-to-day management or operation of the military family housing, as demonstrated by all of the following:

(1) The number of units, the number of bedrooms per unit, and the unit mix are set by the military, and may not be changed by the contractor without prior approval by the military.

(2) Tenants are designated by a military housing agency.

(3) Rents charged to military personnel or their dependents for the housing units are set by the military.

(4) Financing for the project is subject to the approval of the military. The military has sole discretion over the approval of this financing.

(5) Evictions from the housing units are subject to military justice procedures.

(6) Services for the project normally supplied by a municipality are required to be purchased from the military facility or from a provider designated by the military facility.

(7) The military prescribes rules and regulations governing the use and occupancy of the property.

(8) The military has the authority to remove or bar persons from the property.

(9) The military has the authority to impose access restrictions on the contractor and its tenants. Section 3 thereof provided that: (a) It is the intent of the Legislature in enacting this act to provide legislative direction to county assessors, the State Board of Equalization, the courts, and other involved parties regarding the intended interpretation of the term "independent" as it relates to military family housing units that are constructed, renovated, rehabilitated, remodeled, replaced, or managed under the Military Housing Privatization Initiative, or any successor to that law.

(b) Section 107.4 of the Revenue and Taxation Code, as added by this act, does not constitute a change in, but rather, is declaratory of, existing law. Therefore, because this act is declaratory of existing law, no provision of state law, including, but not limited to, Section 8 of Article XVI of the California Constitution, requires reimbursement to any entity for any ad valorem property tax revenue losses that may result from this act.

Back to top


107.5. "Possessory interest"; "improvements"; "constructively affixed, attached, or annexed." [Repealed by Stats. 1987, Ch. 498, in effect January 1, 1988.]

107.6. Notification of taxability of possessory interest. (a) The state or any local public entity of government, when entering into a written contract with a private party whereby a possessory interest subject to property taxation may be created, shall include, or cause to be included, in that contract, a statement that the property interest may be subject to property taxation if created, and that the party in whom the possessory interest is vested may be subject to the payment of property taxes levied on the interest.

(b) Failure to comply with the requirements of this section shall not be construed to invalidate the contract. The private party may recover damages from the contracting state or local public entity, where the private party can show that without the notice, he or she had no actual knowledge of the existence of a possessory interest tax.

The private party is rebuttably presumed to have no actual knowledge of the existence of a possessory interest tax.

In order to show damages, the private party need not show that he or she would not have entered the contract but for the failure of notice.

(c) For purposes of this section:

(1) "Possessory interest" means any interest described in Section 107.

(2) "Local public entity" shall have the same meaning as that set forth in Section 900.4 of the Government Code and shall include school districts and community college districts.

(3) "State" means the state and any state agency as defined in Section 11000 of the Government Code and Section 89000 of the Education Code.

(4) "Damages" means the amount of the possessory interest tax for the term of the contract.

History.—Added by Stats. 1977, Ch. 367, in effect January 1, 1978. Stats. 1996, Ch. 1087, in effect January 1, 1997, substituted "in that contract" for "in such contract", and substituted "the" for "such" in two places in subdivision (a); substituted "he or she" for "he" in two places, and substituted "no actual knowledge of the existence of a possessory interest tax" for "such actual knowledge" in the first sentence of the second paragraph of subdivision (b); and deleted "and shall include any interest described in Section 107.4" after "Section 107" in paragraph (1) of subdivision (c).

County permit.—A county use permit was not a contract within the meaning of this section since the user could not demonstrate any consideration for its exclusive use of the public property for commercial rafting. Scott-Free River Expeditions, Inc. v. El Dorado County, 203 Cal.App.3d 896.

Back to top


107.7. Valuation of cable television and video service interests. (a) When valuing possessory interests in real property created by the right to place wires, conduits, and appurtenances along or across public streets, rights-of-way, or public easements contained in either a cable franchise or license granted pursuant to Section 53066 of the Government Code (a "cable possessory interest") or a state franchise to provide video service pursuant to Section 5840 of the Public Utilities Code (a "video possessory interest"), the assessor shall value these possessory interests consistent with the requirements of Section 401. The methods of valuation shall include, but not be limited to, the comparable sales method, the income method (including, but not limited to, capitalizing rent), or the cost method.

(b) (1) The preferred method of valuation of a cable television possessory interest or video service possessory interest by the assessor is capitalizing the annual rent, using an appropriate capitalization rate.

(2) For purposes of this section, the annual rent shall be that portion of that franchise fee received that is determined to be payment for the cable possessory interest or video service possessory interest for the actual remaining term or the reasonably anticipated term of the franchise or license or the appropriate economic rent. If the assessor does not use a portion of the franchise fee as the economic rent, the resulting assessments shall not benefit from any presumption of correctness.

(c) If the comparable sales method, which is not the preferred method, is used by the assessor to value a cable possessory interest or video service possessory interest when sold in combination with other property, including, but not limited to, intangible assets or rights, the resulting assessments shall not benefit from any presumption of correctness.

(d) Intangible assets or rights of a cable system or the provider of video services are not subject to ad valorem property taxation. These intangible assets or rights include, but are not limited to: franchises or licenses to construct, operate, and maintain a cable system or video service system for a specified franchise term (excepting therefrom that portion of the franchise or license which grants the possessory interest); subscribers, marketing, and programming contracts; nonreal property lease agreements; management and operating systems; a work force in place; going concern value; deferred, startup, or prematurity costs; covenants not to compete; and goodwill. However, a cable possessory interest or video service possessory interest may be assessed and valued by assuming the presence of intangible assets or rights necessary to put the cable possessory interest or video service possessory interest to beneficial or productive use in an operating cable system or video service system.

(e) If a change in ownership of a cable possessory interest or video service possessory interest occurs, the person or legal entity required to file a statement pursuant to Section 480, 480.1, or 480.2 shall, at the request of the assessor, provide as a part of that statement the following, if applicable: confirmation of the sales price, allocation of the sales price among the counties, and gross revenue and franchise fee expenses of the cable system or video service system by county. Failure to provide the statement information shall result in a penalty as provided in Section 482, except that the maximum penalty shall be five thousand dollars ($5,000).

History.—Added by Stats. 1988, Ch. 1630, in effect January 1, 1989. Stats. 2006, Ch. 700 (AB 2987), in effect January 1, 2007, added "either" after "easements contained in" and substituted "cable franchise" for "cable television franchise" before "franchise or license", substituted "cable possessory interest" for "cable television possessory interest" after "Government Code (a", added "or a state franchise to provide video service pursuant to Section 5840 of the Public Utilities Code (a "video possessory interest")" after "possessory interest")" in the first sentence of subdivision (a); added "or video service possessory interest by the assessor" after "television possessory interest" in the first sentence of paragraph (1) of subdivision (b); deleted "by the franchising authority" after "franchise fee received" and added "or video service possessory interest" after "television possessory interest" in the first sentence of paragraph (2) of subdivision (b); substituted "cable possessory interest or video service" for "cable television" after "to value a" in the first sentence of subdivision (c), substituted "cable system or the provider of video services" for "cable television" after "rights of a" in the first sentence, substituted "cable system or video service system" for "cable television system" after "and maintain a" in the second sentence, and substituted "cable possessory interest or video service" for "cable television" twice after "However, a" and after "to put the," and substituted "cable system or video service" for "cable television" after "in an operating" in the third sentence of subdivision (d); and substituted "cable possessory interest or video service" for "cable television" after "ownership of a" and substituted "cable system or video service" for "able television" after "expenses of the" in the first sentence of subdivision (e). Stats. 2007, Ch. 123 (AB 1715), in effect January 1, 2008, deleted "television" after "for the cable" in the first sentence of paragraph (2) of subdivision (b). Stats. 2008, Ch. 179 (SB 1498), in effect January 1, 2009, substituted "possessory" for "posessory" after "video service" in the first sentence of subdivision (b); added a comma after "with other property" in the first sentence of subdivision (c); deleted a comma after "assets or rights", substituted "a workforce" for "a work force" after "operating systems;", and substituted semi-colons for commas in the second sentence of subdivision (d); and substituted "If a" for "Whenever any" before "change in ownership", deleted a comma after "408.1, or 408.2" and substituted a semicolon for a comma twice after "the sales price" and "among the counties" in the first sentence and substituted "the statement" for "this" after "Failure to provide" in the second sentence of subdivision (e).

Note.—Section 1 of Stats. 1988, Ch. 1630, provided that after investigation, the Legislature finds and declares as follows:

(a) The cable television industry is an important news, entertainment, education, and information service whose economic health and continued growth and development are in the best interests of the people of the State of California and are matters of statewide concern. (b) A cable television system is in the business of providing news, entertainment, education, and information services to its subscribers. (c) Intangible rights and assets are exempt from property taxation. (d) Possessory interests of cable television systems do not sell by themselves. (e) A significant portion of the fair market value of a cable television system may be attributable to intangible assets and rights in addition to the ownership of real and personal property. These intangible assets and rights may include, but are not limited to, franchises or licenses to construct, operate, and maintain a cable television system for a specified franchise term (excepting therefrom that portion of the franchise or license which grants the possessory interest), subscriber contracts, marketing and programming contracts, nonreal property lease agreements, management and operating systems, a work force in place, going concern value, deferred, startup, or prematurity costs, covenants not to compete, and goodwill. (f) It is the intent of the Legislature in enacting this act to provide uniformity and certainty in the assessment of any real property possessory interests of a cable television system by providing a method for possessory interest assessment which does not include the value of any intangible assets of a cable television system, but values only real property subject to property tax in accordance with Article XIII and Section 1 of Article XIII A of the California Constitution. (g) This act is not intended and shall not be construed to affect the existing standard of review of an administrative decision in any judicial proceeding. Section 3 thereof provided that it is the intent of the Legislature in enacting this act to clarify the application of existing law and provide uniformity and certainty in the assessment of cable television possessory interests. It is the further purpose and intent of the Legislature in enacting this act to prohibit an assessment policy that equates any cable television possessory interest with the franchise or license itself or with other intangible assets or rights of a cable television system. Nothing in this act shall be construed as requiring the assessment of any cable television possessory interest at a value less than as required by Section 401 of the Revenue and Taxation Code or as prohibiting the assessment of a cable television possessory interest as an asset put to beneficial or productive use in an operating cable television system. Section 4 thereof provided that if any section, subdivision, sentence, clause, or phrase of this act or the application thereof to any person or circumstance is held to be unenforceable by a court of competent jurisdiction, that section, subdivision, sentence, clause, or phrase and the remainder of this act shall remain effective and enforceable to the fullest extent allowed by law, and all sections, subdivisions, sentences, clauses, or phrases of this act are hereby declared to be severable. The Legislature declares that it would have passed this act and each section, subdivision, sentence, clause, or phrase thereof, irrespective of the fact that any one or more sections, subdivisions, sentences, clauses, or phrases is held to be unenforceable.

Note.—Section 5 of Stats. 2006, Ch. 700 (AB 2987) provided that the Legislature finds and declares as follows:

(a) It is the intent of the Legislature that video service providers shall pay as rent a franchise fee to the local entity in which service is being provided for the continued use of streets, public facilities, and other rights-of-way of the local entity in order to provide service.

(b) It is the intent of the Legislature that securing a state franchise by a cable television operator or video service provider pursuant to this act shall not affect the existing requirements governing the valuation of possessory interests as set forth in Section 107.7 of the Revenue and Taxation Code. Furthermore, nothing in this act shall be construed to change the existing jurisdiction of the State Board of Equalization and county assessors with respect to the assessment of these properties for property tax purposes.

Construction.—This section, which codified case law holding that a cable television company's rights-of-way under the authority granted by public entities constitute an assessable franchise subject to property tax, was inapplicable to assessments for the 1982–83 through 1985–86 fiscal years since the county's right to the taxes at issue became fixed on the lien dates of the fiscal years to which they related, which dates preceded enactment of the section. Stanislaus County v. Assessment Appeals Board, 213 Cal.App.3d 1445.

Valuation.—County assessment appeals board did not err in separating cable television system's property into land and land improvements, fixtures, and personal property rather than considering all the property as one appraisal unit for valuation purposes. Section 51 does not mandate appraisal of the property as a single unit. To the contrary, applicable law suggests that rationally dividing property into component parts for valuation purposes is proper. Orange County v. Orange County Assessment Appeals Board No. 1, 13 Cal.App.4th 524.

Approaches to value.—County assessment appeals board did not err in rejecting the comparable sales approach and the income approach when valuing taxable tangible property of a cable television system. The selection of a particular method is within the board's discretion and is constrained only by fairness and uniformity. Thus, use of the income capitalization method using the annual franchise rent was appropriate for valuing the taxpayer's possessory interest, and use of the cost replacement method was appropriate for valuing the remainder of the property, where the board found that neither the comparable sales approach nor the income approach was a reliable method for the property. Orange County v. Orange County Assessment Appeals Board No. 1, 13 Cal.App.4th 524.

Term of possession.—The duty to assess real property at its fair market value requires consideration of evidence that the term of the possessory interests exceeds the stated lease term. There was clear and convincing evidence of a mutual understanding between the county and the owner of cable television franchises that the reasonably anticipated term of possession of the franchises was longer than the stated lease term. The mandate to assess property at fair market value, including possessory interests under Revenue and Taxation Code Section 107.7, required the county assessor to consider evidence that the leases would be extended beyond their stated terms. Charter Communications Properties, LLC v. County of San Luis Obispo (2011) 198 Cal.App.4th 1089.

Back to top


107.8. Lease-leaseback agreements. (a) For purposes of applying subdivision (a) of Section 107 to a lease-leaseback of publicly owned real property, the possession of, claim to, or right to the possession of, land or improvements pursuant to a lease is not independent if the lessee (1) is obligated simultaneously to sublease the property to the public owner of the property for all or substantially all of the lease period, (2) may not exercise authority and exert control over the management or operation of the property separate and apart from the policies, statutes, ordinances, rules and regulations of the public owner, (3) provides as part of the sublease that the public owner has the right to repurchase all of the lessee's rights in the lease, and (4) cannot receive rent or other amounts from the public owner under the sublease (including any amounts due with respect to any repurchase) the present value of which, at the time the lease is entered into, exceeds the present value of the rent or other amounts payable by the lessee under the lease.

(b) For purposes of subdivision (a), the term "all or substantially all" means at least 85 percent.

History.—Added by Stats. 1996, Ch. 1169, in effect September 30, 1996.

107.9. Valuation of interests in publicly owned airports. (a) In addition to any taxable real property interests that an operator of certificated aircraft has at a publicly owned airport that are interests stated in a written agreement for terminal, cargo, hangar, automobile parking lot, storage and maintenance facilities and other buildings and the land thereunder leased in whole or in part by an airline (hereafter the "excluded possessory interests"), there exists an additional taxable possessory interest conferred upon an operator of certificated aircraft at a publicly owned airport.

(b) Notwithstanding any other provision of law relating to valuation, for assessments for the 1998–99 fiscal year, and each fiscal year thereafter, (1) regular assessments of all taxable real property interests of the operator of certificated aircraft at a publicly owned airport, other than the excluded possessory interests, and (2) timely escape assessments upon the real property interests governed by this section issued on or after April 1, 1998, pursuant to Sections 531 and 531.2, shall be presumed to be valued and assessed at full cash value for these interests only if the assessor uses the following direct income approach in capitalizing net economic rent:

(1) The economic rent shall be computed by using one-half of the landing fee rate used to calculate the 1996–97 assessment for real property interests, other than excluded possessory interests, multiplied by the aggregate weight of landings by the operator for the airport's fiscal year prior to the 1996 lien date. The one-half of the landing fee rate used to compute the 1996–97 economic rent shall be annually adjusted in accordance with the percentage change, rounded to the nearest one-thousandth of 1 percent, from October of the prior fiscal year to October of the current fiscal year in the California Consumer Price Index for all items, as determined by the California Department of Industrial Relations, except that in no instance shall this adjusted rate exceed one-half of the airport's actual landing fee rate for the last full fiscal year. The economic rent shall also be adjusted in proportion to the increase or decrease in the aggregate weight of landings by the operator for the last full fiscal year at each airport in the taxing county. In the case of a new operator, the economic rent shall be determined by reference to a similarly situated operator.

(2) The expense ratio shall be the ratio used by each county for the 1996 lien date.

(3) The capitalization rates shall not exceed, or be less than, the rates used by each county for the 1996 lien date, except that they shall be annually adjusted in proportion to the changes in the "Going-in Cap Rate; All Types" as published by the Real Estate Research Corporation, and, as so adjusted, shall be rounded to the nearest one-half percent. If this information ceases to be published by the Real Estate Research Corporation or the format significantly changes, a publication or adjustment agreed to by the airlines and the taxing counties shall be substituted.

(4) The term of possession for each operator shall be the term used by each county to calculate the 1996–97 assessment, but shall not exceed a maximum term of 20 years. Subject to paragraphs (1) to (3), inclusive, of subdivision (b) of Section 61 as applied to interests subject to this subdivision, changes of ownership and term of possessions shall be determined as follows:

(A) In the case of the creation, renewal, extension or assignment of an operating agreement or permit, without the concurrent creation, renewal, extension or assignment of a terminal, hangar, or cargo facility agreement, no change in ownership will be presumed to have occurred and the term of possession shall be the term used by each county for their 1996–97 assessments, not to exceed a maximum of 20 years.

(B) In the case of the creation, renewal, extension or assignment of a terminal, hangar, or cargo facility agreement, a change in ownership will be presumed to have occurred and the term of possession shall be the actual term stated in the written terminal, hangar, or cargo facility agreement, provided that the term shall not be less than 10 years or exceed 15 years.

(C) In the case of any operator without a terminal, hangar, or cargo facility agreement, the actual creation, renewal, extension or assignment of a written operating agreement or permit shall constitute a change in ownership and the actual term of the operating agreement for that carrier will be used, provided that the term shall not be less than 5 years or exceed more than 15 years.

(5) Nothing in this subdivision is intended to apply to the determination of a term of possession for a possessory interest in an excluded possessory interest.

(c) Notwithstanding subdivision (b), in a county in which 1995–96 landing fees were not used to calculate the 1996–97 assessment, the county shall benefit from the presumption of correctness set forth in subdivision (b) only if the assessor uses the following direct income approach in capitalizing net economic rent:

(1) The calculations required in subdivision (b) are performed using the assessment that would have been derived in the 1996–97 fiscal year had the assessor followed the methodology set forth in subdivision (b) using actual airport data for the 1995–96 fiscal year.

(2) If any portion of the airport's landing fee rate for the 1995–96 fiscal year was in dispute and resulted in the creation of an escrow account for a portion of the landing fees paid, that portion of the landing fee rate attributable to the escrowed funds shall not be included in the calculations performed in paragraph (1). However, if the dispute is resolved, in whole or in part, in favor of the publicly owned airport and all or a portion of the escrowed funds are released to the airport, the assessor shall, without regard to any other statutorily imposed time limitation, be entitled to recalculate the assessments required by this subdivision using an adjusted landing fee rate that reflects a final decision on the disposition of escrowed funds to produce escape assessments for all affected years.

(d) Value shall be determined as follows:

(1) Economic rent shall be calculated by applying the expense ratio described in paragraph (2) of subdivision (b) to reduce gross income determined pursuant to paragraph (1) of subdivision (b) or (c) and paragraph (2) of subdivision (c) to arrive at an amount that shall be deemed to be equivalent to economic rent.

(2) Economic rent, as so determined, shall be capitalized for the term provided for in paragraph (4) of subdivision (b) at the capitalization rate determined in accordance with paragraph (3) of subdivision (b).

(e) Assessments under this section shall not exceed the factored base year value established under Article XIII A of the California Constitution. However, adjustments made in aggregate landing weights under this section are deemed to be a valid basis for adjusting the base year value to the extent of the percentage change in landed weights for purposes of Article XIII A of the California Constitution.

Pursuant to Section 65.1, adjustments in aggregate landing weights shall not be considered a change in ownership or a basis for applying a new term of possession in the airlines' preexisting real property interest.

History.—Added by Stats. 1998, Ch. 85 (AB 2318), in effect June 30, 1998.

Note.—Section 3 of Stats. 1998, Ch. 85 (AB 2318) provided that this act is an urgency statute necessary for the immediate preservation of the public peace, health, or safety within the meaning of Article IV of the California Constitution and shall go into immediate effect. The facts constituting the necessity are: This measure is necessary to provide guidance and clarification that is essential to the fair and efficient taxation of airline industry property and possessory interests in publicly owned airports in the current year, and to clarify the status of prior-year property tax payments that have funded essential services provided by local governments and schools.

Leaseholds.—A Chinese state-owned air carrier's leasehold possessory interests and landing rights at airport were properly taxed by the county under Revenue and Taxation Code Sections 107 and 107.9. Imposition of property taxes was not prohibited by tax treaty because treaty created exemption only for income taxes. Taxes on leasehold and possessory interests are not contrary to U.S. Internal Revenue Code or the Chicago Convention on Civil Aviation, where they were not a tax on gross income, but actually a property tax. Air China Limited v. County of San Mateo, 174 Cal.App.4th 14.

Back to top


108. "State assessed property." "State-assessed property" means all property required to be assessed by the board under Section 19 of Article XIII of the Constitution and which is subject to local taxation.

History.—Stats. 1974, Ch 311, p. 589, in effect January 1, 1975, substituted "Section 19" for "Section 14".

109. "Roll." "Roll" means the entire assessment roll. The "secured roll" is that part of the roll containing state assessed property and property the taxes on which are a lien on real property sufficient, in the opinion of the assessor, to secure payment of the taxes. The remainder of the roll is the "unsecured roll." The "local roll" is those parts of the secured and unsecured roll containing property which it is the county assessor's duty to assess. The "board roll" is that part of the secured roll containing State assessed property.

Discretion of assessor.—The action of the assessor in determining that there is insufficient real property to secure the payment of personal property taxes is not reviewable by the courts, San Mateo County v. Maloney, 71 Cal. 205. When there is no real estate on which personal property taxes can be a lien, the assessor has no discretion, and his failure to collect the taxes is a breach of his official duty. People v. Smith, 123 Cal. 70.

Note.—See the restriction in Section 107 on possessory interests as sufficient security. "State assessed property" is defined in Section 108.

109.5. "Machine prepared roll." "Machine prepared roll" means an assessment roll prepared by electronic data-processing equipment, bookkeeping machine, typewriter, or other mechanical device, and such a roll may be displayed in printed form, on microfilm, or by any other means that would make it readily available to the public in a legible form. When so prepared by the assessor, the roll need not contain provision for tax extensions, but the contents thereof may be reproduced by the auditor with provision for tax extensions. Upon such reproduction of the assessment data, the document with provision for tax extensions shall constitute the roll without prejudice to the roll status of the document without such provision.

History.—Added by Stats. 1957, p. 963, in effect September 11, 1957. Stats. 1961, p. 4049, in effect September 15, 1961, added words "data", "bookkeeping machine and typewriter" and second and third sentences; deleted language concerning whether the roll may be prepared in preliminary or final form. Stats 1971, p. 2403, in effect March 4, 1972, added the hyphen between "data" and "processing" and added ", and such . . . in a legible form." after "mechanical device," in the first sentence.

109.6. Extended roll in electronic data processing records. With the consent of the auditor and tax collector and approval of the board of supervisors, data normally appearing on an extended roll and abstract list may be retained in electronic data-processing equipment and no physical document need be prepared.

Notwithstanding any other provisions of this code, where no physical document of the extended roll and abstract list is prepared, all entries required to be made on the extended roll and abstract list shall be entered into the electronic data-processing records.

The data shall be so stored that it can be made readily available to the public in an understandable form.

History.—Added by Stats. 1967, p. 1958, in effect November 8, 1967. Stats. 1972, p. 1390, in effect March 7, 1973, added "and abstract list" after "extended roll" in three places in the first and second paragraphs.

109.7. "Mobilehome"; "installed." [Repealed by Stats. 1980, Ch. 285, in effect July 11, 1980, operative July 1, 1980.]

Back to top


109.8. Mobilehome subject to property taxation. [Repealed by Stats. 1980, Ch. 285, in effect July 11, 1980, operative July 1, 1980.]

110. "Full cash value." (a) Except as is otherwise provided in Section 110.1, "full cash value" or "fair market value" means the amount of cash or its equivalent that property would bring if exposed for sale in the open market under conditions in which neither buyer nor seller could take advantage of the exigencies of the other, and both the buyer and the seller have knowledge of all of the uses and purposes to which the property is adapted and for which it is capable of being used, and of the enforceable restrictions upon those uses and purposes.

(b) For purposes of determining the "full cash value" or "fair market value" of real property, other than possessory interests, being appraised upon a purchase, "full cash value" or "fair market value" is the purchase price paid in the transaction unless it is established by a preponderance of the evidence that the real property would not have transferred for that purchase price in an open market transaction. The purchase price shall, however, be rebuttably presumed to be the "full cash value" or "fair market value" if the terms of the transaction were negotiated at arms length between a knowledgeable transferor and transferee neither of which could take advantage of the exigencies of the other. "Purchase price," as used in this section, means the total consideration provided by the purchaser or on the purchaser's behalf, valued in money, whether paid in money or otherwise. There is a rebuttable presumption that the value of improvements financed by the proceeds of an assessment resulting in a lien imposed on the property by a public entity is reflected in the total consideration, exclusive of that lien amount, involved in the transaction. This presumption may be overcome if the assessor establishes by a preponderance of the evidence that all or a portion of the value of those improvements is not reflected in that consideration. If a single transaction results in a change in ownership of more than one parcel of real property, the purchase price shall be allocated among those parcels and other assets, if any, transferred based on the relative fair market value of each.

(c) For real property, other than possessory interests, the change of ownership statement required pursuant to Section 480, 480.1, or 480.2, or the preliminary change of ownership statement required pursuant to Section 480.4, shall give any information as the board shall prescribe relative to whether the terms of the transaction were negotiated at "arms length." In the event that the transaction includes property other than real property, the change in ownership statement shall give information as the board shall prescribe disclosing the portion of the purchase price that is allocable to all elements of the transaction. If the taxpayer fails to provide the prescribed information, the rebuttable presumption provided by subdivision (b) shall not apply.

(d) Except as provided in subdivision (e), for purposes of determining the "full cash value" or "fair market value" of any taxable property, all of the following shall apply:

(1) The value of intangible assets and rights relating to the going concern value of a business using taxable property shall not enhance or be reflected in the value of the taxable property.

(2) If the principle of unit valuation is used to value properties that are operated as a unit and the unit includes intangible assets and rights, then the fair market value of the taxable property contained within the unit shall be determined by removing from the value of the unit the fair market value of the intangible assets and rights contained within the unit.

(3) The exclusive nature of a concession, franchise, or similar agreement, whether de jure or de facto, is an intangible asset that shall not enhance the value of taxable property, including real property.

(e) Taxable property may be assessed and valued by assuming the presence of intangible assets or rights necessary to put the taxable property to beneficial or productive use.

(f) For purposes of determining the "full cash value" or "fair market value" of real property, intangible attributes of real property shall be reflected in the value of the real property. These intangible attributes of real property include zoning, location, and other attributes that relate directly to the real property involved.

History.—Added by Stats. 1971, p. 3050, in effect March 4, 1972, operative on the lien date in 1972. Stats. 1974, Ch. 311, p. 589, in effect January 1, 1975, substituted " 'fair market value' " for ", 'market value' or, 'value' ". Stats. 1978, Ch. 292, in effect June 24, 1978, added the phrase "Except as is otherwise provided in Section 110.1,". Stats. 1988, Ch. 1519, in effect January 1, 1989, added "(a)" at the beginning of the first paragraph and added subdivisions (b) and (c). Stats. 1995, Ch. 498, in effect January 1, 1996, substituted "that" for "which" after "equivalent" in subdivision (a), and added subdivisions (d), (e), and (f). Stats. 1998, Ch. 783 (SB 1997), in effect September 23, 1998, substituted "other, and both the buyer and the seller have" for "other and both with" after "exigencies of the" and added a comma after "being used" in the first sentence of subdivision (a); substituted "is" for "shall be" in the first sentence and added the fourth and fifth sentences of subdivision (b); substituted "that" for "which" in the second sentence of subdivision (c); deleted "such" after "and other" in the second sentence of subdivision (f).

Construction.—"Enforceable restrictions", defined in Revenue and Taxation Code Section 402.1, include only governmentally imposed land restrictions. Carlson v. Assessment Appeals Board No. 1, 167 Cal.App.3d 1004. Under this section, an arm's length, open market sale for a price that is not influenced by an exigency of either buyer or seller permits the assessor to presume fair market value from the purchase price, but the presumption may nevertheless be rebutted by evidence that the fair market value of the property is otherwise. Dennis v. Santa Clara County, 215 Cal.App.3d 1019.

Lien date.—The assessment of a taxpayer's plant fixtures was correct, even though the assessment appeals board failed to consider the reduction in market value of the fixtures resulting from the taxpayer's announcement of closing, and subsequent closing of the plant six months after the lien date. The effects of the plant closure were irrelevant to the appraised value of the fixtures, and the fact that there was a forced sale of property at a sacrificial price after the lien date had no bearing on the property's value on the lien date. The taxpayer's contention to the contrary was also contrary to the principle of "fair market value" as set forth in subdivision (a). Fujitsu Microelectronics, Inc. v. Assessment Appeals Board, 55 Cal.App.4th 1120.

Value.—The value of a building in the marketplace is its value to potential purchasers generally, and the normal uses to which potential purchasers could put it must be considered. In valuing property, the assessor must adhere to the statutory standard of "full cash value", and in doing so, net earnings to be capitalized are not those of the present owner of the property but those that would be anticipated by a prospective purchaser. Pacific Mutual Life Insurance Company v. Orange County, 187 Cal.App.3d 1141. Although the cost of pollution cleanup that reduces the fair market value of property may form the basis for a reduction in that property's valuation, where the weight of the evidence supports the conclusion that as of the lien date a potential purchaser would not have been aware of the contamination, there was insufficient evidence to establish that the assessor knew or should have known that a tire manufacturing plant was contaminated on the date he valued it. Firestone Tire & Rubber Co. v. Monterey County, 223 Cal.App.3d 382. The proper assessed valuation of a contaminated property is the price at which a willing buyer and a willing seller would consummate an open market sale of the property, considering the polluted condition of the property. As all property is to be assessed at fair market value, the dispositive question is whether, and to what extent the property's value is effected by the contamination. In the context of property known to be polluted on the lien date, its value is what it would cost on the open market, independent of what the purchaser may be able to recover from others for cleanup costs imposed by environmental law. Mola Development Corporation v. Orange County Assessment Appeals Board No. 2, 80 Cal.App.4th 309.

County assessment appeals board's use of the cost replacement method to value a cable television system's taxable, tangible property, which resulted in a value lower than the value using the comparable sales method or the income method, was not a failure to assess at full value as required by law. The values differed because the method the assessor had used captured intangibles that were not subject to taxation. Orange County v. Orange County Assessment Appeals Board No. 1, 13 Cal.App.4th 524. The assessment appeals board properly included the value of certain related intangibles, operating permits and "business enterprise" value, when determining the market value of plaintiff's landfill property. While intangibles are not subject to property tax, the presence of intangibles may enhance the value of real property, and that value may be determined by assuming their presence. American Sheds, Inc. v. Los Angeles County, 66 Cal.App.4th 384.

In valuing geothermal power plants for property tax purposes, the county assessor properly capitalized the plants' income from fixed-price contracts under which the plants sold electricity to a power company at rates far above market price. Although the contracts were no longer available, the full value of the property included projected income at the contract rates rather than market rates, since a prospective buyer would be willing to pay more for the plants with the existing contracts. Also, the contracts were the means by which the property was put to beneficial use and thus, had to be considered for purposes of assessing the property's full value. Freeport-McMoran Resource Partners v. Lake County, 12 Cal.App.4th 634.

Methods.—The market data and income methods of assessing the fair market value of real property are traditional and well accepted. Norby Lumber Company, Inc. v. Madera County, 202 Cal.App.3d 1352; Dennis v. Santa Clara County, 215 Cal.App.3d 1019. The income method is one of three basic methods for determining full cash value, the others being the comparative sales approach and the reproduction and replacement cost approach. The income method assumes that in an open market a willing buyer of the property would pay a willing seller an amount approximately equal to the present value of the future income to be derived from the property. Since a property's full value must be determined by reference to the price it would bring on an open market, the net earnings to be capitalized are not those of the present owner of the property, but those that would be anticipated by a prospective purchaser. Freeport-McMoran Resource Partners v. Lake County, 12 Cal.App.4th 634. Where taxpayers failed to carry their burden of proving that the assessor arbitrarily used the band-of-investment method for deriving the applicable capitalization rate, the use of this method was proper. Mission Housing Development Company v. City and County of San Francisco, Cal. 59 Cal.App.4th 55. When valuing low-income housing developed and operated under section 15 of the National Housing Act of 1949, which housing is subject to various restrictions, including a maximum return on equity; the financing for which is federally subsidized; and for which the government provides credits that result in a 1 percent effective mortgage interest rate, the assessor properly calculated the band-of-investment capitalization rate for the income method as required by Property Tax Rule 8 using the effective 1 percent rate resulting from government credits for such property, as it represented the only applicable market rate for the property. Maples v. Kern County Assessment Appeals Board, 96 Cal.App.4th 1007; Bontrager v. Siskiyou County Assessment Appeals Board, 97 Cal.App.4th 325.

Cash or its equivalent.—The assessment of property at fair market value requires a calculation of value in terms of cash, and property tax rule 4, providing that an assessor shall convert debts to their cash equivalents, is mandatory and expresses the policy of the Legislature that property be assessed locally in a uniform manner. Thus, in failing to discount to its cash equivalent a loan the purchaser had assumed from the seller at a below market rate, the assessor incorrectly determined the property's value, thereby resulting in an excessive assessment. Prudential Insurance Co. v. City and County of San Francisco, 191 Cal.App.3d 1142. Property tax rule 4 is mandatory and must be strictly followed in order to provide the assessment appeals board with an evidentiary foundation for its assessment. Merely giving the assessment appeals board raw sales data and stating that the assessor's opinion was within the "range of values" shown by the data does not comport with the rule and requires reversal of the board's decision, since the fair market value of the properties as determined by the board is based on evidence that is legally incompetent. Main & Von Karman Associates v. Orange County, 23 Cal.App.4th 337. The assessor's valuation of residential property based on the comparable sales method was not supported by legally competent evidence and invalid where the assessor failed to make adjustments to reflect the differences between the comparable sales and the subject property as required by Property Tax Rule 4. Mitchell v. Los Angeles County, 60 Cal.App.4th 497.

An assessor's appraisals met legal standards where ratios used by his experts in appraising oil-producing property to quantify several types of risk factors associated with each projected net cash flow were not the sole basis for assessment. The appraisers made separate adjustments to each of the comparable sales, as required by Property Tax Rule 4, for which purpose the ratios were developed. Nor did the appraisers violate Rule 4 in failing to separately consider certain factors associated with each sale, such as capital costs, operating costs, and geology. Variations in these types of factors were already accounted for in the projected cash flows. Texaco Producing, Inc. v. Kern County, 66 Cal.App.4th 1029.

Highest and best use.—A county board did not impermissibly assess real property owned by an airplane manufacturer and located next to an airport in relation to the unique value of the property to the manufacturer instead of its general value in the market place. The board did find that the restrictions and regulations affecting the use of the property constituted an enhancement and benefit to the nature of the manufacturer's operation at the airport as a peculiarly suitable location in that the manufacturer was operating under those conditions for years and would continue to do so for years. However, the board was making that finding in conjunction with its conclusion that the highest and best use at the time of purchase of the property (the manufacturer had recently purchased it after previously renting it) was for aviation industrial purposes. Under this section, the board was entitled to consider the prior and current use of the property in making its determination of the highest and best use of the property. Los Angeles County v. McDonnell Douglas Corp., 219 Cal.App.3d 715. The assessor did not improperly assess an independent power plant developed and operated under an above-market price, government-facilitated power purchase agreement by using the actual income stream resulting from the agreement. The highest and best use of the property as of the lien date was as a qualifying facility, selling its power to a public utility pursuant to the agreement. That assured the taxpayer a guaranteed purchaser for its entire output and provided for sale of that power at an above-market price. Thus, the assessor's use of the actual applicable terms of the agreement to capitalize the property's income was an appropriate exercise of discretion. Watson Cogeneration Co. v. Los Angeles County, 98 Cal.App.4th 1066.

Improvement bonds.—The 1998 amendment to this section, which created a rebuttable presumption that the amount of an improvement bond is included in the purchase price, was intended to clarify the existing method of real property assessments to exclude improvement bond liens from the calculation of a property's fair market value and thus, applied to a taxpayer's claim/refund action which was pending as of the date of the amendment. Huson v. Ventura County, 80 Cal.App.4th 1131.

Investment tax credit.—An assessor does not have to take the availability of investment tax credit into account in determining value. May Department Stores Co. v. Los Angeles County, 196 Cal.App.3d 755.

Use of purchase price.—Persons who purchased real property after March 1975, and whose property was appraised as of the date of purchase were not denied equal protection of the law where both before and after the adoption of Article XIII A of the Constitution, assessment procedures were consistent with the section and the "regression analysis procedure" used in reaching the computer calculated value for the property as of the date of purchase was the same as was used before the adoption of Article XIII A. The only difference in appraisal procedures was that the purchase price of the property rather than a hypothetical figure was used for fair market value, and increased accuracy does not amount to a denial of equal protection. Schoderbek v. Carlson, 152 Cal.App.3d 1027. The purchase price paid by the buyer of real property, which had been used by the federal government as a petroleum reserve, established a presumptive fair market value of the property for assessment purposes, pursuant to subdivision (b). The term "negotiated" means simply "arranged" or "concluded". Maples v. Assessment Appeals Board, 103 Cal.App. 4th 172. While a recent, open market, arm's length sale of a particular type of property may be a very important factor in determining its fair market value, the sale, by itself, does not provide sufficient, reliable data to enable the assessor to make an accurate valuation of that property; it is only a starting point in appraising the property. Even an arm's length transaction may involve factors that skew the purchase price and make it an unreliable indicator of the fair market value. In this instance, at the time of purchase, the purchasers had an ownership interest in the corporate tenant leasing the property and the lease generated rent below market value. Market value, therefore, is generally established by numerous sales of the same or comparable property and, although the price paid for property may be admissible to prove its market value, that fact alone is not conclusive. Thus, the assessor properly applied the valuation method by determining that comparable commercial properties had recently been sold at greater dollar amounts per square foot. Dennis v. Santa Clara County, 215 Cal.App.3d 1019. The purchase by a property owner of transferable development rights allowing the owner, in developing its property, to exceed the maximum floor area ratio otherwise allowed under a city redevelopment plan, was a taxable event within the framework of Article XIII A of the Constitution, permitting reappraisal upon a change of ownership. In the absence of substantial and convincing evidence to the contrary, the assessor was entitled, under this section, to rely upon the purchase price paid for the rights for purposes of determining their full cash value. Mitsui Fudosan (U.S.A.), Inc. v. Los Angeles County , 219 Cal.App.3d 525.

Presumptive fair market value—Oil and gas interests.—A taxpayer, in challenging the valuation of oil and gas mineral property interests for the purpose of determining ad valorem taxes, had the burden of proving a fair market value different from the purchase price by a preponderance of the evidence. However, the only evidence the taxpayer presented was that no evidence of proved oil and gas reserves had been established at the time of acquisition. In other words, reserves had not been proved or disproved. Rather, the reserves were probable or possible. This absence of evidence was not equivalent to affirmative evidence of the property's fair market value. Proved reserves are not the only value component of an oil and gas mineral interest. Moreover, knowledgeable and informed persons testified that the purchase price was the fair market value, which was contrary to the taxpayer's claim that the value of the oil and gas mineral interest was zero. Accordingly, the court of appeals held that the assessor correctly determined the base year value of the property interest to be its purchase price and that the taxpayer did not rebut this section's purchase price presumption. California Minerals v. County of Kern, 152 Cal.App.4th 1016.

Intangibles—Triable Issues of Material Fact.—Taxpayer's contentions that the value of intangibles was improperly included in determining the hotel property's assessed value constituted triable questions of material fact, and therefore, a summary judgment was inappropriate. Trial court erred in granting the taxpayer's motion for summary judgment because the taxpayer's contention that the county assessor failed to remove the value of intangibles such as the hotel's franchise license agreement and the workforce in place, in determining the full market value of its hotel property, presented triable issues of material fact. Trial court erred in failing to examine the entire administrative record to determine whether the assessment appeals board's findings were supported by substantial evidence. EHP Glendale, LLC, et al. v. County of Los Angeles (2011) 193 Cal.App.4th 262.

Decisions Under Former Section 110, "Full cash value".

Full cash value.—"Full cash value" is the price that property would bring to its owner if it were offered for sale on an open market under conditions in which neither buyer nor seller could take advantage of the exigencies of the other; it is synonymous with market value. A. F. Gilmore Co. v. Los Angeles County, 186 Cal.App.2d 471.

A single, recent, open market and arm's-length sale of a particular property, per se, does not provide sufficient, reliable data for the assessor to make an accurate valuation of that property. Market value becomes an important standard of measurement in the valuation of property only after there have been numerous sales or exchanges of similar property, but if the property is of a kind seldom exchanged, then recourse must be had to other means of ascertaining value. Guild Wineries & Distilleries v. Fresno County, 51 Cal.App.3d 182.

Factors to be considered.—In arriving at the value of land it is proper to consider every use to which the land is naturally adapted and which would enhance its value in the estimation of persons generally purchasing in the open market. Wild Goose Country Club v. Butte County, 60 Cal.App. 339, holding that a hunting preserve need not be assessed solely with reference to its value as grazing land.

The court approved the valuation of a water company where the appraisal method, based on the capitalization of income, utilized an income study of rates charged by four other water companies in the general area. Maywood Mutual Water Co. v. Los Angeles County, 12 Cal.App.3d 957.

The assessor correctly considered the full economic rental value of real property subject to a lease even though the actual rental income was below the economic rental. Clayton v. Los Angeles County, 26 Cal.App.3d 390.

Interdivisional transfers of manufactured goods with an accompanying markup in value, for purposes of delivery or to facilitate marketing, result in a trade level increase and corresponding increase in value in accord with Property Tax Rule No. 10. Beckman Instruments, Inc. v. Orange County, 53 Cal.App.3d 767.

Under the market value concept, where price is the basis of value, the sales tax and freight charges are elements of value. Xerox Corp. v. Orange County, 66 Cal.App.3d 746. Under the trade level theory of assessment, if the owner of property at the consumer level is subject to application of a sales tax element in the valuation of the property, the lessor of the same kind of property at the consumer level is subject to the same sales tax element. San Diego County v. Assessment Appeals Board No. 2, 140 Cal.App.3d 52. Since California sales tax is unconstitutional as to leases of tangible personal property to the United States because the legal incidence of the tax falls on the United States, United States v. California State Board of Equalization, 650 F.2d 1127, aff'd 456 U.S. 901, the value of equipment leased to the federal government should not include sales tax.

General rules may be followed.—It is proper for the assessor to promulgate certain general rules and formulas of percentages of depreciation, construction costs, square foot area charges and other factors in order to secure uniformity in valuations as required by law. Eastern-Columbia, Inc. v. Los Angeles County, 61 Cal.App.2d 734, 742.

Possessory interest.—In valuing a leasehold interest in exempt lands and improvements by the capitalization of income method it is improper, in computing the anticipated net income to be capitalized, to deduct from anticipated gross income the lessee's charges for rent, amortization of his investment, or payments of principal and interest on his mortgage debt. The proper method of valuing a possessory interest in a housing project at a permanent military installation is to deduct from annual anticipated gross income the operating and maintenance expenses and the amount required by the lease to be deposited to a replacement reserve, and to capitalize the difference for the remaining years of the lease at a rate which will allow for risk, interest, and taxes. De Luz Homes, Inc. v. San Diego County, 45 Cal.2d 546; Fairfield Gardens, Inc. v. Solano County, 45 Cal.2d 575; Victor Valley Housing Corp. v. San Bernardino County, 45 Cal.2d 580; El Toro Development Co., Inc. v. Orange County, 45 Cal.2d 586.

The "full cash value" of a possessory interest is the present value of its use for the unexpired term of the lease, not lessened by the amount of rent reserved. The rent is not an interest in land that must be deducted to determine the lessee's interest, but is merely the consideration for the use of the land. The Texas Co. v. Los Angeles County, 52 Cal.2d 55.

A reasonably anticipated term of possession may not be imputed to a possessory interest when the assessee has no taxable interest in the property at the expiration of the leased term. American Airlines, Inc., v. Los Angeles County, 65 Cal.App.3d 325.

Assessment of motion picture negatives.—"Market value" for assessment purposes is the value of property when put to beneficial use; it is not merely whatever residual value may remain should the property be reduced to its constituent elements. In the event the beneficial use of the property would not pass to a willing buyer on an open market, the assessor must treat the property as having no actual market for valuation purposes and use such pertinent factors as replacement costs and income analysis for determining valuation. Michael Todd Co. v. Los Angeles County, 57 Cal.2d 684.

Water rights of a city.—A county, in assessing taxable water rights owned by a city, may use as a basis for capitalization of income, a price for water taken from Bureau of Reclamation contracts, and a price for electricity agreed to be paid by a gas and electric company in a contract with the city, rather than the water and power prices actually charged in the city's nonprofit operation. Tuolumne County v. State Board of Equalization, 206 Cal.App.2d 352.

Lease of grazing land.—In assessing the possessory interest of a lessee of tax-exempt land leased for grazing purposes, it is proper to capitalize the rent for the total number of years of the lease and renewal options. El Tejon Cattle Co. v. San Diego County, 64 Cal.2d 428.

Income method—oil lands.—In capitalizing anticipated future oil recoveries on public lands, no deduction is proper for royalty payments due the government under a standard oil and gas lease. Under a "unit contract", however, the government's "working interest" is exempt real property requiring an allocation of potential oil recoveries. Atlantic Oil Co. v. Los Angeles County, 69 Cal.2d 585.

Assessment of title plant.—"Market value" for assessment purposes is the value of property when put to beneficial use. In the absence of any actual market for a title insurance company's "title plant" of the history of real property parcels in a county, an assessor's use of the cost approach method for determining valuation of the plant is not arbitrary and does not violate any standards prescribed by the Legislature. Western Title Guaranty Co. v. Stanislaus County, 41 Cal.App.3d 733.

Note.—For additional cases relating to value, see annotations to Section 401 of the code and to Section 1, Article XIII of the Constitution.

Back to top


110.1. "Full cash value" under Article XIII A. (a) For purposes of subdivision (a) of Section 2 of Article XIII A of the California Constitution,

"full cash value" of real property, including possessory interests in real property, means the fair market value as determined pursuant to Section 110 for either of the following:

(1) The 1975 lien date.

(2) For property which is purchased, is newly constructed, or changes ownership after the 1975 lien date, either of the following:

(A) The date on which a purchase or change in ownership occurs.

(B) The date on which new construction is completed, and if uncompleted, on the lien date.

(b) The value determined under subdivision (a) shall be known as the base year value for the property.

(c) Notwithstanding Section 405.5, for property which was not purchased or newly constructed or has not changed ownership after the 1975 lien date, if the value as shown on the 1975–76 roll is not its 1975 lien date base year value and if the value of that property had not been determined pursuant to a periodic reappraisal under Section 405.5 for the 1975–76 assessment roll, a new 1975 lien date base year value shall be determined at any time until June 30, 1980, and placed on the roll being prepared for the current year; provided, however, that for any county over four million in population the board of supervisors may adopt a resolution granting the assessor of that county until June 30, 1981, the authority to determine those values. Regardless of the foregoing restrictions, property that escaped taxation for 1975 and was not merely underassessed for that year, shall be added to the roll in any year in which the escape is discovered at its 1975 base year value indexed to reflect inflation as provided in subdivision (f). In determining the new base year value for that property, the assessor shall use only those factors and indicia of fair market value actually utilized in appraisals made pursuant to Section 405.5 for the 1975 lien date. The new base year values shall be consistent with the values established by reappraisal for the 1975 lien date of comparable properties which were reappraised pursuant to Section 405.5 for the fiscal year. In the event that determination is made, no escape assessment may be levied and the newly determined "full cash value" shall be placed on the roll for the current year only; provided, however, the preceding shall not prohibit a determination which is made prior to June 30 of a fiscal year from being reflected on the assessment roll for the current fiscal year.

(d) If the value of any real property as shown on the 1975–76 roll was determined pursuant to a periodic appraisal under Section 405.5, that value shall be the 1975 lien date base year value of the property.

(e) As used in subdivisions (c) and (d), a parcel of property shall be presumed to have been appraised for the 1975–76 fiscal year if the assessor's determination of the value of the property for the 1975–76 fiscal year differed from the value used for purposes of computing the 1974–75 fiscal year tax liability for the property, but the assessor may rebut that presumption by evidence that, notwithstanding the difference in value, that parcel was not appraised pursuant to Section 405.5 for the 1975–76 fiscal year.

(f) For each lien date after the lien date in which the full cash value is determined pursuant to this section, the full cash value of real property, including possessory interests in real property, shall be adjusted by an inflation factor, which shall be determined as provided in subdivision (a) of Section 51.

History—Added by Stats. 1978, Ch. 292, effective June 24, 1978. Stats. 1978, Ch. 332, in effect June 30, 1978, under subdivision (b) changed the number 405.61 to 405.6. Stats. 1978, Ch. 576, in effect August 31, 1978, added the phrase "including possessory interests in real property" to subdivisions (a) and (c). Also added the same phrase to paragraph (2) of subdivision (a). Stats. 1979, Ch. 49, in effect May 2, 1979, substituted "fair market value" for "full cash value" in subdivision (a), and restated subdivision (a); and substituted subdivision (b) for former subdivision (b) which provided that "The value determined pursuant to subdivision (a) shall be the 'Base Year Value.' If property has not been appraised pursuant to Section 405.5 to its appropriate base year value, 'full cash value' means the reappraised value of such property as of the base year lien date. Such reappraisals may be made at any time, notwithstanding the provisions of Section 405.6." Stats. 1979, Ch. 1188, in effect September 30, 1979, relettered subdivision (b) as subdivisions (b), (c), (d), and (e), and relettered former subdivision (c) as subdivision (f); added "; provided, however, that for counties over 4 million in population the Board of Supervisors may adopt a resolution granting the assessor of such county until June 30, 1981, to determine such values" after "year" in the first sentence of subdivision (c); substituted "subdivisions (c) and (d)" for "this subdivision" in the first sentence of subdivision (e); and substituted "this section" for "subdivision (a) and (b)" in the first sentence of subdivision (f). Stats. 1983, Ch. 1281, in effect September 30, 1983, deleted "or 405.6" after "405.5", substituted "any county" for "counties" before "over," and added "the authority" after "June 30, 1981" in the first sentence of subdivision (c), and substituted "that, those, or the" for "such" in subdivisions (c), (d), (e), and (f). Stats. 1984, Ch. 1164, in effect January 1, 1985, substituted "be adjusted by . . . Section 51" for "reflect the percentage change in cost of living, as defined in Section 2212; provided, that the value shall not reflect an increase in excess of 2 percent of the full cash value of the preceding lien date" after "shall" in subdivision (f). Stats. 1985, Ch. 186, effective January 1, 1986, added "of the following" after "Section 110 for either" in subdivision (a), substituted "." for "; or" after "date" in subsection (1) thereof, and added ", either of the following" after "date" in subsection (2) thereof; and deleted "any provisions of" after "Notwithstanding" in the first sentence, and added the second sentence to subdivision (c).

Note.—Section 2 of Stats. 1979, Ch. 49, provided that (a) Section 1 of this act shall be applied to the 1978–79 fiscal year and fiscal years thereafter.

(b) Except as otherwise provided in this subdivision, if the value of any property is reduced pursuant to Section 110.1 of the Revenue and Taxation Code, the reduced taxes resulting therefrom shall be reflected in a corresponding reduction in the next succeeding tax installment or installments for such property in the 1979–80 fiscal year unless there was a change in the assessee or assessees of record between July 1, 1978, and June 30, 1979, in which case a refund of such reduced taxes shall be prorated between such assessees of record in the same proportion as they participated in the payment of such taxes. In the event that the current address of a former assessee of record of such property entitled to share in any such refund is not known to the county, that portion of such refund shall be withheld by the county and the assessee may claim a refund from the county treasurer at any time prior to July 1, 1980. No reduction or refund shall be given pursuant to this subdivision of any amount previously collected to pay the interest and redemption charges on any indebtedness approved by the voters prior to July 1, 1978. Sec. 3 thereof provided that it is the intent of the Legislature to correct an improper assessment practice which has resulted from the misinterpretation of Article XIII A of the California Constitution, as added to the California Constitution pursuant to the approval by the voters, of Proposition 13 on the ballot for the Direct Primary Election held June 6, 1978, and Section 110.1 of the Revenue and Taxation Code, as added by Chapter 292 of the Statutes of 1978, amended by Chapter 332 of the Statutes of 1978, and further amended by Chapter 576 of the Statutes of 1978.

It is further the intent of the Legislature that this act be construed as an act necessary for the implementation of Proposition 13, and, as such, is not a cost mandated by the state.

No appropriation is made by this act, nor is any obligation created thereby, pursuant to Section 2231 or 2234 of the Revenue and Taxation Code. Moreover, no claim shall be considered with respect to this act by the State Board of Control pursuant to Section 905.2 of the Government Code or Section 2250 of the Revenue and Taxation Code, and the Department of Finance shall not review or report on this act pursuant to Section 2246 of the Revenue and Taxation Code. Sec. 4 thereof provided that this act clarifies the intent of Article XIII A of the California Constitution and Chapters 292 and 332 of the Statutes of 1978, to correct the administrative interpretation of such provisions which has resulted in the incorrect assessment of certain properties, and does not make a substantive change. It is the intent of the Legislature that counties which have established base year values in conformity with the intent of Section 110.1 of the Revenue and Taxation Code, as clarified by this act, shall not be required to redetermine such base year values.

Note.—Section 7 of Stats. 1979, Ch. 1188, amended Section 2 of Stats. 1979, Ch. 49, to provide that (a) Section 1 of this act shall be applied to the 1978–79 fiscal year and fiscal years thereafter.

(b) Except as otherwise provided in this subdivision, if the value of any property is reduced pursuant to Section 110.1 of the Revenue and Taxation Code, the reduced taxes resulting therefrom shall be refunded or shall be reflected in a corresponding reduction in the next succeeding tax installment or installments for such property in the 1979–80 fiscal year unless there was a change in the owner or owners of record between July 1, 1978, and June 30, 1979, in which case a refund of such reduced taxes shall be prorated between such owners of record in proportion to the time they owned the property during the fiscal year. In the event that the current address of a former owner of record of such property entitled to share in any such refund is not known to the county, that portion of such refund shall be withheld by the county and the owner may claim a refund from the county treasurer at any time prior to July 1, 1980. No reduction or refund shall be given pursuant to this subdivision of any amount previously levied to pay the interest and redemption charges on any indebtedness approved by the voters prior to July 1, 1978. Sec. 13 of Stats. 1979, Ch. 1188, provided no payment by state to local governments because of this act.

Note.—Section 20 of Stats. 1985, Ch. 186, provided that it is the intent of the Legislature in enacting Sections 11 and 11.3 of this act, which amend Sections 110.1 and 532.3 of the Revenue and Taxation Code, to clarify the application of these provisions to property which existed on the 1975 lien date, but escaped taxation entirely and was not identified and placed on the roll prior to June 30, 1980 (or June 30, 1981, in the case of counties over four million in population). In these cases, it is the intent of the Legislature that any of these properties which escaped taxation shall be placed on the current roll even though the property was not discovered until after the dates of June 30, 1980, and June 30, 1981. Sec. 21 thereof provided reimbursement to local governments for costs mandated by the State pursuant to this act.

Construction.—In an action alleging that in interpreting the section as amended in 1979, the assessor erred in determining the 1978–79 tax roll by factored increases rather than by physical reappraisals conducted pursuant to Section 405.5, and in rolling back the 1978–79 tax roll (which then reflected 100 percent of the 1975 fair market value of all property) to the original 1975–76 tax levels without a periodic physical reappraisal, the relief sought was barred by the limitation in the section which permitted determination of new 1975 lien date base year values only until June 30, 1980. Further, the assessor had complied with the provisions of the section by rolling back the 1978–79 assessment roll to the original 1975 year values. Since the real property in the county had been appraised for the 1975–76 fiscal year by computer factoring and the property values determined for that fiscal year differed from the values in the previous year's assessment roll, the presumption of the section arose that the real property had been reappraised for 1975–76 and that as a consequence the 1978–79 appraisal made by the previous assessor was improper. And it was within the assessor's discretion not to rebut this presumption. Swicegood v. Rosh, 148 Cal.App.3d 119.

Inflation factor.—Requiring adjustment of 1975–76 base values for the three tax years between establishment of the full cash value base in 1975 and the 1978 effective date of Article XIII A represented a valid exercise of legislative power. Armstrong v. San Mateo County, 146 Cal.App.3d 597.

Lands owned by local governments and located outside their boundaries.—Subdivision (a) of this section, by defining "full cash value" as fair market value as of a given date, does not prevent the application of Article XIII A of the Constitution to lands owned by a local government and located outside the government's boundaries. Section 51 defines "taxable value" as the lesser of either the "base year value" of the property compounded annually by an inflation factor of no more than 2 percent or the current fair market value of the property (in cases where the property has declined in value). This section, in turn, provides several definitions of "base year value." Under subdivision (d) of this section, if the value of the property as shown on the 1975–1976 roll was determined pursuant to a periodic appraisal under Section 405.5, that value is the 1975 lien date base year value of the property. Periodic appraisals under Section 405.5 include appraisals made on a restricted value basis such as the appraisal of extraterritorial land under the valuation limitations of Article XIII, Section 11. Thus, for such land owned at the time of the 1975 assessment, this section's base year value is not the fair market value but the 1975 Article XIII, Section 11 valuation. San Francisco v. San Mateo County, 10 Cal.4th 554.

Geothermal resources.—Once proved reserves have been established, the property interest of a lessee under a geothermal lease must be assigned a base year value, which is adjusted annually to reflect the depletion of reserves. It is also adjusted when appropriate to reflect the discovery of new reserves. Phillips Petroleum Co. v. Lake County, 15 Cal.App.4th 180.

Back to top


110.5. "Full value." "Full value" means fair market value, full cash value, or such other value standard as is prescribed by the Constitution or in this code under the authorization of the Constitution.

History.—Added by Stats. 1974, Ch. 311, p. 589, in effect January 1, 1975. Stats. 1978, Ch. 292, in effect June 24, 1978, added the phrase "full cash value,".

110.6. "Change in ownership defined." [Repealed by Stats. 1978, Ch. 332, in effect June 30, 1978.]

115. "Interest" in property. "Interest" in any property includes any legal or equitable interest.

116. "Map." "Map" includes plat.

117. "Lien date." "Lien date" is the time when taxes for any fiscal year become a lien on property.

Note.—Government Code, Section 13290, provides that the fiscal year shall commence on the first day of July.

118. "Assessment year." "Assessment year" means the period beginning with a lien date and ending immediately prior to the succeeding lien date for taxes levied by the same agency.

119. "County board." "County board" means the county board of supervisors when sitting as the county board of equalization.

121. "Taxing agency." "Taxing agency" includes the State, county, and city. "Taxing agency" also includes every district that assesses property for taxation purposes and levies taxes or assessments on the property so assessed.

History.—Stats. 1941, p. 409, operative February 1, 1941, added words " 'Taxing agency' also includes," making separate sentence of last portion.

Back to top


122. "Revenue district." "Revenue district" includes every city and district for which the county officers assess property and collect taxes or assessments.

123. "Amount of defaulted taxes." "Amount of defaulted taxes" on property means the sum of the following amounts:

(a) The amount of taxes which were a lien on the real estate at the time of the declaration of default.

(b) All other unpaid taxes of every description which were a lien on the property for the year of declaration of default and for each year since the declaration of default, as shown on the delinquent rolls for which the time of the declaration of default is past, or, if the property was not assessed for any year, which would be shown on such delinquent roll if it had been assessed in that year; except that the unpaid taxes which would be shown on such delinquent roll if the property had been assessed in any such year shall not be paid if the property was not assessed for any year because of having been acquired by the State or other public agency other than by tax deed. The amount of taxes for any year not assessed shall be based on the valuation required to be made by the assessor on redemption of unassessed property.

History.—Stats. 1945, p. 1059, in effect September 15, 1945, added last clause of first sentence of (b), relative to property acquired by public agencies. Stats. 1953, p. 2100, in effect September 9, 1953, substituted "roll" or "rolls" for "list" or "lists," respectively, wherever such words appear. Stats. 1984, Ch. 988, in effect September 11, 1984, substituted "defaulted" for "sold" before "taxes," and deleted "which has been sold to the state" after "property" in the first sentence; substituted "declaration of default" for "sale" after "the" in subsection (a); and substituted "declaration of default" for "sale" after "year of", "since the", and "time of the" in the first sentence of subsection (b).

Note.—Section 74 of Stats. 1984, Ch. 988 provided . . . (a) Whenever there has been a sale to the state or a deed to the State under the provisions of Division 1 (commencing with Section 101) of the Revenue and Taxation Code on or prior to the effective date of this act, and the right to redeem the property subject to the sale or deed has not been terminated, the sale or deed to the state shall be canceled as of the effective date of this act. Any such property sold to the state shall be deemed "tax-defaulted" property as of the date of its sale to the state. Any such property deeded to the state shall be deemed "tax-defaulted" property as of the date of its sale to the state and shall be subject to a power of sale for nonpayment of taxes. Simultaneously with the cancellation of any tax deed to the state, the lien for delinquent taxes on the real property shall revive. That lien shall have priority over all other liens on the real property, regardless of the time of creation.

(b) For purposes of subdivision (a), the tax collector, for and on behalf of the state, shall execute and record with the county recorder of the county in which the property is located a release of equity or quitclaim of the property, in the form prescribed by the Controller. The release shall be acknowledged by the county clerk, without charge. Parties of interest in the property, prior to the issuance of the tax deed to the state shall acquire by the cancellation of the tax deed the same right or interests they had prior to the issuance of the tax deed, as if the tax deed were never issued. That right or interest shall be subject to the lien for taxes. Sec. 75 provided no payment by state to local governments because of this act.

Construction.—The "amount of sold taxes" includes an amount representing a tax for each year subsequent to the deed to the State as well as before, notwithstanding the fact that the property is not assessed while the State is the owner. Andreson Co. v. Los Angeles County, 55 Cal.App. 585, construing former Political code Section 3817.

Construction—constitutionality.—This section and Section 4102 require one who has purchased delinquent property from a reclamation district to pay, as a condition to redemption, an amount equivalent to taxes on the property during the period it was owned by the district. As so construed these provisions are valid. Sutter-Yuba Investment Co. v. Waste, 21 Cal.2d 781.

124. "Current taxes." "Current taxes" means taxes which are a lien on property, but which are not included in "amount of defaulted taxes" except that, between a lien date and the time in the same calendar year when property is declared to be tax-defaulted, the taxes becoming a lien on this lien date in such calendar year are not yet "current taxes."

History.—Stats. 1941 (First Extra Session 1940), p. 131, in effect June 1, 1941, deleted second paragraph. Stats. 1941, p. 1423, operative June 1, 1941, restored provisions of original section. Stats. 1984, Ch. 988, in effect September 11, 1984, substituted "defaulted" for "sold" after "amount of", substituted "declared to be tax-defaulted" for "sold to the state for taxes" after "is" in the first paragraph, and deleted the former second paragraph.

Back to top


125. "Current roll." "Current roll" means the roll containing the property on which current taxes are a lien.

126. "Tax-defaulted property." "Tax-defaulted property" is real property which is subject to a lien for taxes which, by operation of law and by declaration of the tax collector, are in default and from which the lien of the taxes for which it was declared tax-defaulted has not been removed. Where used in this division or in any other provision of law.

(a) Any reference to property tax sold or tax deeded to the state shall refer to tax-defaulted property.

(b) Any reference to the sale to the state shall refer to the declaration of default.

(c) Any reference to the deeding to the state shall refer to property which is subject to a power of sale for nonpayment of taxes.

History.—Stats. 1984, Ch. 988, in effect September 11, 1984, substituted "tax-defaulted property" and the definition thereof for "tax-sold property" and its definition.

127. "Tax-deeded property." [Repealed by Stats. 1984, Ch. 988, in effect September 11, 1984.]

128. "Assessor." "Assessor" means the assessing officer of a county, by whatever title he may be known.

Legal action.—An assessor, in his official capacity, has standing to bring a motion to vacate a stipulated judgment entered in an action by a property owner against the county on the ground it was void where the judgment revised the base-year value reached by the assessor and reduced assessments on the local roll. Plaza Hollister Limited Partnership v. San Benito County, 72 Cal.App.4th 1.

129. "Business inventories." "Business inventories" shall include goods intended for sale or lease in the ordinary course of business and shall include raw materials and work in process with respect to such goods. "Business inventories" shall also include animals and crops held primarily for sale or lease, or animals used in the production of food or fiber and feed for such animals.

"Business inventories" shall not include any goods actually leased or rented on the lien date nor shall "business inventories" include business machinery or equipment or office furniture, machines or equipment, except when such property is held for sale or lease in the ordinary course of business. "Business inventories" shall not include any item held for lease which has been or is intended to be used by the lessor prior to or subsequent to the lease. "Business inventories" shall not include goods intended for sale or lease in the ordinary course of business which cannot be legally sold or leased in this state. If goods which cannot be legally sold or leased are not reported by the taxpayer pursuant to Section 441, it shall be conclusively presumed that the value of the goods when discovered is the value of the goods on the preceding lien date.

"Business inventories" shall also include goods held by a licensed contractor and not yet incorporated into real property.

History.—Added by Stats. 1968, p. 7 (First Extra Session), in effect September 23, 1968, operative March 1, 1969. Stats. 1970, p. 542, in effect June 30, 1970, added "or lease" in the first and second sentences of the first paragraph and the first sentence of the second paragraph; substituted "actually leased" for "being leased" in the first sentence of the second paragraph and added the second sentence of the second paragraph. Stats. 1970, p. 2069, in effect November 23, 1970, provided that the amendments contained in Stats. 1970, p. 542, are to apply prospectively to the 1971–72 fiscal year and fiscal years thereafter. Stats. 1978, Ch. 1394, in effect January 1, 1979, added the third paragraph. Stats. 1986, Ch. 1420, effective January 1, 1987, added the third and fourth sentences in the second paragraph, dealing with illegal goods and services.

Note.—Section 3 of Stats. 1978, Ch. 1394, provided no payment by state to local governments because local agencies have classified property in the hands of contractors as business inventories and so Section 1 is declaratory of existing law. Sec. 4 thereof provided no escape assessment shall be levied against property described in the amendment as enacted by Section 1 by any local agency which assessed property of that type as business inventory for the 1974–75, 1975–76, 1976–77, and 1977–78 fiscal years. This act shall be operative for the 1978–79 fiscal year and following fiscal years.

Construction.—"Business inventories" includes price tags, price tickets, sales checks, cash register tapes, restaurant paper goods, gift boxes, wrapping paper, and twine where title thereto passes to purchasers upon sale of merchandise purchased. May Department Stores Co. v. Los Angeles County, 196 Cal.App.3d 755.

Goods intended for sale.—Replacement spare parts that rotated between the vendor's supply of spare parts and its customers' computer equipment did not qualify as business inventory. The replacement parts were not inventory intended for sale because customers paid no consideration and received any and all replacement parts at no additional cost and the vendor did not treat the pool of replacement parts as inventory for income tax and accounting purposes. Amdahl Corp. v. County of Santa Clara, 16 Cal.App.4th 604.

Raw materials.—Cobalt 60 used by a taxpayer for the purpose of irradiating its customers products did not constitute business inventory. Although de minimis amount of mass were lost and absorbed into the customers' products in the irradiating process, the cobalt 60 was not an item delivered as part of the provided services. Sterigenics International v. Orange County, 47 Cal.App.4th 1541.

Form letters.—Form letters sent by a collection service to debtors qualify as exempt business inventory of a nonprofessional service. Property of nonprofessional service enterprises constitutes exempt business inventory if it is delivered incidental to the rendition of the service, regardless of whether it is delivered to the customer or to a third party designated by the customer. Transworld Systems, Inc. v. Sonoma County, 78 Cal.App.4th 713.

Reusable containers.—Reusable containers in which a soft drink manufacturer supplied carbon dioxide gas and component syrup to its wholesale customers do not constitute business inventory. As the manufacturer retained control over them and as they were subject to retrieval by the manufacturer's representatives, the containers were not intended for sale. Westinghouse Beverage Group, Inc. v. San Diego County, 203 Cal.App.3d 1442.

Back to top


130. "Documented vessel." (a) "Vessel" includes every description of watercraft used or capable of being used as a means of transportation on water, but does not include aircraft.

(b) "Documented vessel" means any vessel which is required to have and does have a valid marine document issued by the Bureau of Customs of the United States or any federal agency successor thereto, except documented yachts of the United States, or is registered with, or licensed by, the Department of Motor Vehicles. "Documented vessel" does not include any vessel exempt from taxation under subdivision (l) of Section 3 of Article XIII of the Constitution of the State of California.

(c) "Vessel of the United States" means a documented vessel, that is, a vessel registered, enrolled and licensed, or licensed under the laws of the United States, except documented yachts of the United States.

(d) "Port of documentation" means the home port of a vessel as shown in the marine document in force and issued to the owner of such vessel by the Bureau of Customs of the United States or any federal agency successor thereto.

(e) "Marine document" includes registry, enrollment and license, and license.

(f) "In this state" means within the exterior limits of the State of California, and includes all territory within these limits owned by, or ceded to, the United States of America.

(g) "Natural resources" consist of both the living resources of the sea and the mineral and other nonliving resources of the seabed and subsoil together with living organisms belonging to sedentary species, which are organisms which, at the harvestable stage, either are immobile on or under the seabed or are unable to move except in constant physical contact with the seabed or the subsoil.

(h) "Oceanographic research vessel" means a vessel which the secretary of the department in which the United States Coast Guard is operating, or his successor, finds is an oceanographic research vessel under the laws of the United States.

History.—Added by Stats. 1967, p. 3045, in effect November 8, 1967. Stats. 1974, Ch. 1467, p. 3205, in effect January 1, 1975, added ", or is registered with, or licensed by, the Department of Motor Vehicles" at the end of the first sentence of subdivision (b). Stats. 1975, Ch. 224, p. 601, in effect January 1, 1976, substituted "Subdivision (l) of Section 3" for "Section 4" in the second sentence of subdivision (b).

134. "Unsecured property." "Unsecured property" is property:

(a) The taxes on which are not a lien on real property sufficient, in the opinion of the assessor, to secure payment of the taxes.

(b) The taxes on which were secured by real property on the lien date and which real property was later acquired by the United States of America, the State, or by any county, city, school district or other public entity and the taxes required to be transferred to the unsecured roll pursuant to Article 5 (commencing with Section 5081) of Chapter 4 of Part 9.

History.—Added by Stats. 1943, p. 2440, in effect August 4, 1943. Stats. 1947, p. 2021, in effect September 19, 1947, rearranged provisions of section as subsection (a) and added subsection (b). Stats. 1959, p. 3044, in effect September 18, 1959, deleted "political subdivision and the taxes canceled thereon within three years from the lien date thereof" following "other" and added the balance of subsection (b). Stats. 1979, Ch. 31, in effect January 1, 1980, substituted in subsection (b) "property" for "estate" and "entity" for agency. Also substituted "Article 5 . . ." for Section 4986 of this code.

135. "Assessed value"; "tax rate." (a) "Assessed value" shall mean 25 percent of full value to and including the 1980–81 fiscal year, and shall mean 100 percent of full value for the 1981–82 fiscal year and fiscal years thereafter.

(b) "Tax rate" shall mean a rate based on a 25 percent assessment ratio and expressed as dollars, or fractions thereof, for each one hundred dollars ($100) of assessed valuation to and including the 1980–81 fiscal year, and shall mean a rate expressed as a percentage of full value for the 1981–82 fiscal year and fiscal years thereafter.

(c) Whenever this code requires comparison of assessed values, tax rates or property tax revenues for different years, the assessment ratios and tax rates shall be adjusted as necessary so that the comparisons are made on the same basis and the same amount of tax revenues would be produced or the same relative value of an exemption or subvention will be realized regardless of the method of expressing tax rates or the assessment ratio utilized.

(d) For purposes of expressing tax rates on the same basis, a tax rate based on a 25 percent assessment ratio and expressed in dollars, or fractions thereof for each one hundred dollars ($100) of assessed value may be multiplied by a conversion factor of twenty-five hundredths of 1 percent to determine a rate comparable to a rate expressed as a percentage of full value; and, a rate expressed as a percentage of full value may be multiplied by a factor of 400 to determine a rate comparable to a rate expressed in dollars, or fractions thereof, for each one hundred dollars ($100) of assessed value and based on a 25 percent assessment ratio.

History.—Added by Stats. 1978, Ch. 1207, in effect July 11, 1980, operative January 1, 1981.

136. Taxes or assessments on roll subject to Division 1 provisions. Whenever any taxes or assessments are entered on the roll under any provision of law, such taxes or assessments shall, notwithstanding any other provision of law to the contrary, be subject to all provisions of this division.

History.—Added by Stats. 1979, Ch. 242, in effect July 10, 1979. Stats. 1980, Ch. 411, in effect January 1, 1981, renumbered the section which was formerly numbered 135..

Back to top


Back to top