Madonna v. County of San Luis Obispo

Opinion

FLEMING, Acting P. J.

The County of San Luis Obispo appeals the judgment of the superior court which, (1) set aside an assessment by the county board of equalization of property commonly known as the Madonna Inn owned and operated by respondent Alex Madonna, (2) awarded Madonna $1,000 attorneys’ fees, and (3) remanded the cause to the board for further proceedings.

Facts

For the fiscal year 1969-1970, the Tax Assessor of the County of San Luis Obispo, acting under authority of Revenue and Taxation Code section 401, assessed the full cash value of the Madonna Inn at $4,389,816: $394,400 for land, $425,816 for personal property, and $3,569,600 for improvements (motel, restaurant, and shops).

Madonna appealed the improvements assessment to the county board of supervisors sitting as a board of equalization. In the absence of any comparable properties, the board considered two other traditional methods of valuation: replacement cost, and income capitalization. (See

De Luz Homes, Inc.

v.

County of San Diego,

45 Cal.2d 546, 563-564 [290 P.2d 544].) On replacement cost, Madonna presented evidence that the improvements cost $2,200,000 and had depreciated in value to between $1,000,000 and $1,300,000. The assessor presented evidence that the cost of improvements less depreciation totaled $1,537,240.

On income capitalization, the assessor offered the following computation: from the gross income of the Madonna Inn for 1968 ($1,971,891), the assessor subtracted the cost of goods sold ($529,398), other expenses ($908,630), and estimated income from land ($34,711) and personal property ($53,225), to reach the amount of income attributable to improvements ($445,927); the assessor then capitalized the improvement income at a rate of 12.5 percent to reach a value for improvements of $3,569,600.

[60]

The board found in pertinent part:

“2. The income capitalization method, as applied to the Madonna Inn, is inappropriate and misleading in that enterprise income on said premises is improperly commingled and improperly included with income properly attributable solely to land and buildings.