Justia California Supreme Court Opinion Summaries

In assessing the value of electric power plants for purposes of property taxation, assessors may not include the value of intangible assets and rights in the value of taxable property. An electric company purchased "emission reduction credits" (ERCs), which the company had to purchase to obtain authorization to construct an electric power plant and to operate it at certain air-pollutant emission levels. These ERCs constituted intangible rights for property taxation purposes. In assessing the value of the power plant using the replacement cost method, the State Board of Equalization (Board) estimated the cost of replacing the ERCs. In also using an income approach in assessing the plant, the Board failed to attribute a portion or the plant's income stream to the ERCs and to deduct that value from the plant's projected income stream prior to taxation. In analyzing the Board's valuation of the power plant, the Supreme Court held (1) the Board improperly taxed the power company's ERCs when it added their replacement cost to the power plant's taxable value; and (2) the Board was not required to deduct a value attributable to the ERCs under an income approach. Remanded.View "Elk Hills Power, LLC v. Bd. of Equalization" on Justia Law

Until 2007, petroleum refinery property was assessed by separately assessing the value of land and improvements separately from the value of fixtures, including machinery and equipment. In light of evidence that petroleum refinery property, including land, improvements, and fixtures, was generally sold as a unit, the Board of Equalization enacted Cal. Code Regs. tit. 18, 474 (Rule 474), which provides that, for purposes of determining Proposition 8 declines in the value of petroleum refinery property, petroleum refinery property is rebuttably presumed to constitute a single appraisal unit - unlike most industrial property. The Western States Petroleum Association sought to invalidate the regulation. The trial court and court of appeal held that Rule 474 was both substantively and procedurally invalid. The Supreme Court affirmed, holding (1) the court of appeal erred in finding that Rule 474 was substantively invalid, as the board was not statutorily or constitutionally prohibited from appraising refinery land and fixtures as a single unit; but (2) because the Board failed to provide an adequate assessment of the rule's economic impact, the rule was procedurally deficient under the Administrative Procedures Act. View "W. States Petroleum Ass'n v. Bd. of Equalization" on Justia Law