News

Sun campus won't be reassessed

 

The Sun Microsystems campus in Menlo Park won't be reassessed, despite the fact that the company has changed hands, the city of Menlo Park has learned.

Oracle completed its purchase of the company in January, a deal valued at over $7 billion. While California law stipulates that property be re-assessed when it changes hands so that property taxes are based on a more recent valuation of the property, the hardware giant has apparently found a way around that.

The property's current assessed value is $355.4 million, according to information on the county assessor's Web site.

Discussing the news at their June 8 meeting, City Council members said they were disappointed but not surprised by it. The fact that Oracle avoided a reassessment suggests that state law needs to be tightened, Councilman Heyward Robinson said.

Comments

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Posted by A non moose
a resident of Woodside: other
on Jun 15, 2010 at 12:50 pm

Golly, can I buy a house and not have it's value reassessed, like Oracle just did?

Sort of explains how the burden of property taxes in California has shifted from commercial interests to residential (from 40/60 to 60/40, residential/commercial.)

And we were sold Prop 13 as a way to keep Granny in her house, when all along it was about tax breaks for the largest corporations (Southern Pacific, PG&E, etc...).

Time to re-write the commercial side of Prop 13. Let's keep Granny in her place, but end corporate welfare for the large landowners.

In these times, they too must pay their fair share.




Like this comment
Posted by tanya
a resident of Menlo Park: Downtown
on Jun 15, 2010 at 12:55 pm

Ugh.


Like this comment
Posted by Peter Carpenter
a resident of Atherton: Lindenwood
on Jun 15, 2010 at 2:41 pm

This is something that the City should challenge both in the court of law and the court of public opinion.

It is legalistic trickery at its worst and Orcale is an expert in these tactics. They need to be called upon to publicly defend their actions.


Like this comment
Posted by Joseph E. Davis
a resident of Woodside: Emerald Hills
on Jun 15, 2010 at 2:45 pm

What a shock! You mean the law only applies to the little people? I am stunned and surprised.


Like this comment
Posted by barbara
a resident of another community
on Jun 15, 2010 at 3:35 pm

Just because the company was sold for $7 billion doesn't mean the campus in Menlo Park is worth that much. Maybe in today's commercial market which is in bad shape, it is worth less than the assessed $355.4 million.


Like this comment
Posted by Bob
a resident of Menlo Park: Central Menlo Park
on Jun 15, 2010 at 3:46 pm

Are you really that shocked?
Remember who runs and owns most of Oracle? Mega-mogul Larry Ellison, that's who.
And this isn't the first time he's had fun with San Mateo County assessments.
Remember this Almanac headline from 2008 - "Ellison wins 60% tax cut on Woodside estate - He will get a $3 million refund; school, town coffers are hit." Web Link


Like this comment
Posted by A non moose
a resident of Woodside: other
on Jun 15, 2010 at 6:19 pm

I can forgive Larry Ellison, if he rescues the Golden State Warriors and brings LeBron to the Bay Area.

Yeah, I could definitely forgive him, then.

hehhehhehhehheh....

(sure, it's off topic, but a fella can dream, can't he?)


Like this comment
Posted by Jennifer Bestor
a resident of Menlo Park: Allied Arts/Stanford Park
on Jun 15, 2010 at 6:39 pm

Jennifer Bestor is a registered user.

If the Sun campus were worth less than its current assessed value, we could rest assured that the Oracle Tax Department would be all over the Assessor's office for a Prop 8 write-down-to-market.




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Posted by curious
a resident of Menlo Park: other
on Jun 15, 2010 at 7:58 pm

Hey, Jennifer, since you are the expert here, can you explain how this happened? My guess is that Oracle is claiming that Sun still owns the property --and the fact that they now own Sun is irrelevant


Like this comment
Posted by Peter Carpenter
a resident of Atherton: Lindenwood
on Jun 15, 2010 at 8:42 pm

SF Chronicle May 11:

"Prop. 13 says that if all ownership interests in an entity are sold in a single transaction, property owned by that entity should be considered sold, triggering a tax reassessment.

Right now, California tax code says a single owner must buy 50 percent or more of the property to be considered a change of ownership. If three or more parties jointly buy a company, that is not considered a change of ownership. For instance, E&J Gallo bought the Martini Winery in St. Helena in 2002, with both the name and deed changing. But because multiple shareholders were involved on each side, no entity bought more than 50 percent and there was no reassessment."


Like this comment
Posted by POGO
a resident of Woodside: other
on Jun 15, 2010 at 9:14 pm

I suspect the details are buried in Oracle's SEC filings that describe details of the transaction. I don't know if a stock for stock or cash for stock transaction triggers Prop 13 ownership change.

Perhaps an accountant familiar with securities issues can comment.


Like this comment
Posted by Peter Carpenter
a resident of Atherton: Lindenwood
on Jun 15, 2010 at 9:20 pm

I wonder why the Almanac cannot do the very simple kind of research that we are doing on this Forum. It seems that they are just picking up stories from other newspapers - sad.


Like this comment
Posted by curious
a resident of Menlo Park: other
on Jun 15, 2010 at 9:42 pm

Peter, that suggests that property owned by corporations will never be reassessed because there will almost invariably be more than one shareholder. What a horrific loophole. That should be fixed even if nothing else is done to Prop 13.


Like this comment
Posted by Peter Carpenter
a resident of Atherton: Lindenwood
on Jun 15, 2010 at 9:50 pm

Curious states:"Peter, that suggests that property owned by corporations will never be reassessed because there will almost invariably be more than one shareholder. What a horrific loophole. That should be fixed even if nothing else is done to Prop 13."

Again from the SF Chronicle:
"With California mired in a budget crisis, some lawmakers are eyeing revisions to Proposition 13, the state's landmark law limiting property-tax increases, considered the untouchable third rail of California politics.

Assemblyman Tom Ammiano, D-San Francisco, is sponsoring legislation that he said would stop commercial property owners from evading higher taxes when businesses change hands, a practice that he said deprives cash-strapped cities and counties of hundreds of millions of dollars.

"There's a loophole in the law, and it's morally incumbent upon us to close it ... so when businesses change ownership, there's no game-playing," Ammiano said Monday.

His bill, AB2492, specifies when a business should be considered to have changed hands, triggering a tax reassessment of its real estate holdings."


Like this comment
Posted by Jennifer Bestor
a resident of Menlo Park: Allied Arts/Stanford Park
on Jun 15, 2010 at 10:06 pm

Curious, I, too, am curious. I'll email the assessor's office and ask -- but I suspect it's the same as so many other corporate mergers -- for property tax purposes, the firm will claim it was a merger, rather than an acquisition. Or the value of the property will show in the sale contract as its current assessment. Hopefully, there is a tax attorney out there who'll tell us -- buildings depreciate nicely on the books ... goodwill is harder to amortize ...

Sun Microsystems does appear as the (sole) owner in the current 2009-10 rolls. Unfortunately, they're in another, presumably Ravenswood, school district, so I haven't paid them any real attention.

Within the Menlo Park City School District properties that I know, it's almost all landlords, with the (large) exception of SRI. Very few firms own their property -- just Draeger's and a few of the banks. Others (Flegel's, Cashin, etc.) are owned by family members, often second generation.

That said, the Washington Mutual building on Santa Cruz was still showing up as Northern California Savings & Loan in the 2009-10 rolls. NCS&L merged into Great Western Savings in the early 80's, I believe, which was acquired by Washington Mutual in the late 90's ... there was finally a reassessment to market in 2009, when Chase bought WaMu out (with the odd bad loan guaranteed by us taxpayers...), but rumor has it that Chase got a bunch of those reassessments reversed around the state. It will be interesting to see if ours stuck.

Needless to say, I am counting down to the 2010 rolls ... just a few more weeks. I have got to be the only person in California who waits with bated breath for property tax bills to come out. Makes a nice summer counterpoint to Christmas Eve.

Peter, buy advertising. Counting the bylines in the current Almanac, I'm beginning to think it's a Battle of Britain situation ... never have so few covered so much for so many.


Like this comment
Posted by A non moose
a resident of Woodside: other
on Jun 16, 2010 at 8:47 am

Jennifer:

"Makes a nice summer counterpoint to Christmas Eve."

Uh, we've gotten together here, and we're a little worried, maybe we can get someone for you to talk to...

;-)

Seriously though, bless you. Let us know what you find.


Sorry, but further commenting on this topic has been closed.

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