I recently got my home’s tax appraisal reduced, so did Larry Ellison. I argued that my appraisal was higher than the price we paid for the house and was then increased, although average county house prices had declined 12.5%. Larry made somewhat different arguments.
John Murrell explain:
You donâ€™t get to be one of the richest men in the world by being a pushover, so it was no surprise to see Oracle CEO Larry Ellison bring his boardroom combativeness to bear when he felt the property tax assessment was too high on his 23-acre Japanese-style compound in Woodside. Ellisonâ€™s aptly named Octopus Holdings bought the property in 1995 for $12 million, and over the next nine years Ellison built it up in the style of a Japanese emperorâ€™s 16th century country residence. The estate consists of a nearly 8,000-square-foot main house, a guest house, three cottages and a gym. The landscaping includes a 5-acre man-made lake, two waterfalls, two bridges and hundreds of cherry and maple trees, redwoods, pines and oaks. Itâ€™s the kind of place where a Zen monk would feel comfortable, assuming he won the Powerball.
Including the cost of delays, overruns and change orders, Ellison put about $200 million into the compound. Based on the reproduction cost â€” without those added expenses â€” the San Mateo County assessorâ€™s office listed the value at $166.3 million in January 2005, and thatâ€™s where itâ€™s stayed. Octopus Holdings, however, had the estate on the books at $64.7 million, and took its case to the appeals board, claiming the propertyâ€™s unique nature would put it at a disadvantage on the open market. The appeals panel agreed â€” given the limited market for luxury homes, particularly in the 16th century Japanese style, the â€œoverimprovements,â€ and the expense of keeping up the â€œexcessiveâ€ landscaping, the board said the property is suffering from â€œsignificant functional obsolescence.â€ The board knocked $100 million off the valuation for the last three years and will pay Ellison a refund of about $3 million.
Unfortunately, Ellisonâ€™s gain is the rest of the communityâ€™s loss. Almost half of the refund comes out of Portola Valley School District funds, and the propertyâ€™s lower valuation means the district will be short $250,000 to $300,000 in annual revenue starting next fiscal year. â€œItâ€™s a significant chunk,â€ said Assistant Superintendent Tim Hanretty. â€œItâ€™s a permanent, ongoing reduction.â€ Other losers are the county general fund and assorted cities and redevelopment agencies.
Hat tip to Karen Myers.