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Contact Wendy Bucknum,
Public Information Specialist
949-597-4483
E-mail: wendy.bucknum@pcm-lwv.com

GRF Receives Property Tax Refunds

LAGUNA WOODS, CA. October 7, 2004 – The Golden Rain Foundation of Laguna Woods (GRF) announced today that the bulk of the refunds of property taxes previously paid has been received from the County of Orange. The amount received this week is $954,749.49, which includes interest of $93,394.81. These are refunds of 2000, 2001, 2002 and 2003 taxes on business and personal property. GRF had previously received refunds of $259,318.65 for property taxes on the Community Center Building, bringing the total received to date to $1,214,068.14.

In July, an agreement was stipulated between GRF and the County Tax Assessor to eliminate assessments of GRF property from 2004 on, which will result in a savings to Leisure World members of approximately $550,000 in 2004, and even more each year thereafter. That stipulation also calls for the County to refund a portion of prior years’ taxes paid by GRF. This was the result of several years of disagreements, discussions, and appeals by the Financial Services staff at Leisure World (employees of Professional Community Management, Inc., (PCM) the managing agent for the Leisure World-Laguna Woods corporations. It was the contention of Janet Price, Finance & Administration Director for Leisure World, that the taxes paid by GRF resulted in the homeowners in LAGUNA WOODS VILLAGE being subjected to double taxation in violation of Proposition 13 and the California constitution. Ms. Price and Pat McLaughlin, Controller, with the invaluable assistance of the Law Offices of Gary R. King & Associates, filed appeals on behalf of GRF, alleging that taxes assessed to GRF were incorrect and/or improper.

Background

The issue of double taxation of all LAGUNA WOODS VILLAGE homeowners began with the implementation of Proposition 13, which was passed in 1978 but not fully implemented until 1980-81. Under Prop.13, each home’s initial assessment is equal to its purchase price, reduced by any exemptions such as the homeowners’ exemption for a primary residence. In the case of LAGUNA WOODS VILLAGE homes, the value of all the GRF properties are reflected in the purchase price of each home. In other words, the home prices would not be as high as they are if it weren’t for the clubhouses, golf courses and other GRF facilities. Therefore, the individual homeowners are personally assessed for all the GRF assets by virtue of their purchase of their home in LAGUNA WOODS VILLAGE. To then assess GRF, which must collect from those same homeowners in order to pay its own property taxes, is clearly double taxation.

The OC Assessor agreed in 1980 to reduce the initial assessed value of each co-operative unit purchased after 1980 by its share of the value of GRF assets, called a “common area exemption.” Had this been done properly and consistently for all units in LAGUNA WOODS VILLAGE, there would have been almost no double taxation. In fact, the Assessor did not adequately reduce the assessed values of the units purchased before 1995, when the staff at Leisure World discovered and addressed the issue. The extent of the double taxation up to that point was relatively minor. However, in 1996, GRF purchased additional land and also began rebuilding its cable television system, both of which resulted in additional property tax assessments. Since then, the County has continued to increase GRF taxes for such things as clubhouse renovations, land improvements and a new Community Center Building. The common area exemptions were not increased accordingly, resulting in double taxation of the homeowners.

The Assessor’s office ultimately agreed to eliminate all taxes on GRF property (other than the value that is already embedded in the value of the individual homes) starting in 2004. It was also agreed that the County would refund all taxes paid on the Community Center Building (purchased in 2001) as well as personal and business property taxes for 1996 through 2003. Refunds of taxes paid from 2000 through 2003 have now been received, and GRF expects to receive shortly some additional small refunds for years prior to 2000.

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