Laws, Regulations & Annotations

Property Taxes Law Guide – Revision 2018

Property Tax Annotations

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Annotation 755.0091

755.0091 Special Franchises.

1. Special franchises are an integral component of the utility's distribution system. As such, they will be appraised as unitary and operating property of the utility. They are an element of the operating unit.

2. Deluz Homes, Inc. v. San Diego County, 45 Cal.2d 546, is a judicial mandate to employ a precise appraisal method to establish the full value of any possessory interest. The Deluz decision controls the standard of "full value" and is applicable to utility special franchises.

3. The State Board of Equalization is required to assess the special franchises in its regular manner. The special franchise is, for all practical purposes, an easement in otherwise tax-exempt property and is a possessory interest within the meaning of Revenue and Taxation Code section 107.

4. Franchise fees represent amortization or rent of a possessory interest and are not an expense for valuation purposes.

5. All special franchises are appraised in the same manner as other possessory interests assessed by the State Board of Equalization. The distinction between Property Tax Rules 25 and 26 will be applicable. C 5/3/1977.