Stamps v. Board of Supervisors

DRAPER, P. J.

The assessor of the City and County of San Francisco assessed the possessory interest of real party in interest, as lessee of the land and improvements of the Sutter-Stockton garage, at $1,138,000. Upon application of lessee corporation to the supervisors of the city and county, sitting as a board of equalization, the assessment was reduced to zero. Plaintiff, as a taxpayer, sought relief by mandamus. The trial court issued peremptory writ requiring the board to restore the assessment. The board and lessee appeal.

The garage was built upon land owned by the city, and was financed by bonds issued by the corporation. By agreement between city and corporation, the latter agreed that, upon completion of construction, bids for the right to lease and operate the garage would be called for, and lease in the form attached to the agreement would be awarded to the highest bidder. The agreement required real party in interest to bid not less than 100 per cent of net proceeds. The garage was completed and the bid made. It was high, and the lease was awarded to real party in interest. The lease is for a term of 50 years. It requires lessee to pay all receipts from operation of the garage to a bank as trustee, which will disburse them to pay (1) the sums required for bond retirement, (2) operating expenses approved by the city controller, (3) administrative and management expenses not to exceed $10,000 per year, (4) the agreed percentage (100) of net receipts to itself for the city’s account

(Larsen

v.

City & County of San Francisco,

152 Cal.App.2d 355 [313 P.2d 959], involving an identical lease). Upon payment of all bonds, the city may terminate the lease. The corporation is the sole obligor upon the bonds, and they are secured only by its leasehold interest.

At the hearings before the board, the assessor showed that he had valued the fee interest on the same basis as comparable privately owned properties. He assumed a life of 20 years for the lease, an assumption not disputed since all parties feel that the bonds will be fully paid before the maximum lease period expires. He then computed the present value of the reversionary right of the city, and fixed the value of the leasehold upon a computation which we need not detail since it has not been questioned. He then adjusted this leasehold valuation for the proportion of actual value normally assessed for tax purposes, and reached the figure of $1,138,000.